<PAGE>   1
                                                                 EXHIBIT 10.115

                 SECOND AMENDED AND RESTATED AND CONSOLIDATED
                           LOAN AND SECURITY AGREEMENT


               BY THIS SECOND AMENDED AND RESTATED AND CONSOLIDATED LOAN AND
SECURITY AGREEMENT entered into as of the _____ day of May, 1997, between FINOVA
CAPITAL CORPORATION, a Delaware corporation ("Lender"), formerly known as
Greyhound Financial Corporation and successor-by-merger to Greyhound Real Estate
Finance Company, an Arizona corporation ("GREFCO"), having a business and
mailing address at 7272 East Indian School Road, Suite 410, Scottsdale, Arizona
85251, and PREFERRED EQUITIES CORPORATION, a Nevada corporation ("Borrower"),
having its principal place of business and mailing address at 4310 Paradise
Road, Las Vegas, Nevada 89109, hereby confirm and agree as follows:

                                    RECITALS

               A. GREFCO and Borrower entered into a Loan and Security
Agreement, dated as of February 1, 1988 which evidenced a loan from GREFCO to
Borrower (the "Original PEC Loan Agreement").

               B. GREFCO and Borrower entered into an Amended and Restated Loan
and Security Agreement dated as of May 10, 1989 (the "Restated PEC Loan
Agreement") which amended and restated the Original PEC Loan Agreement in its
entirety.

               C. The Restated PEC Loan Agreement was amended by an Amendment
Number One to Amended and Restated Loan and Security Agreement dated as of June
14, 1989 (the "First PEC Amendment"), by an Amendment No. 2 to Amended and
Restated Loan and Security Agreement dated as of April 16, 1990 (the "Second PEC
Amendment"), by an Amendment No. 3 to Amended and Restated Loan and Security
Agreement dated as of May 31, 1991 (the "Third PEC Amendment"), by an Amendment
No. 4 to Amended and Restated Loan and Security Agreement dated as of January
13, 1992 (the "Fourth PEC Amendment"), by an Amendment No. 5 to Amended and
Restated Loan and Security Agreement dated as of February 23, 1993 (the "Fifth
PEC Amendment"), by an Amendment No. 6 to Amended and Restated Loan and Security
Agreement dated as of June 28, 1993 (the "Sixth PEC Amendment"), by an Amendment
No. 7 to Amended and Restated Loan and Security Agreement dated as of January
24, 1994 (the "Seventh PEC Amendment"), by an Amendment No. 8 to Amended and
Restated Loan and Security Agreement dated as of April 15, 1994 (the "Eighth PEC
Amendment"), by an Amendment No. 9 to Amended and Restated Loan and Security
Agreement dated as of August 31, 1994 (the "Ninth PEC Amendment"), by an
Amendment No. 10 to Amended and Restated Loan and Security Agreement dated as of
January 26, 1995 (the "Tenth PEC Amendment"), by an Amendment No. 11 to Amended
and Restated Loan and Security Agreement dated as of September 22, 1995 (the
"Eleventh PEC Amendment"), by an Amendment No. 12 to Amended and Restated 


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Loan and Security Agreement dated as of September 29, 1995 (the "Twelfth PEC
Amendment"), by an Amendment No. 13 to Amended and Restated Loan and Security
Agreement dated as of December 13, 1995 (the "Thirteenth PEC Amendment"), by an
Amendment No. 14 to Amended and Restated Loan and Security Agreement dated as of
June 5, 1996 (the "Fourteenth PEC Amendment"), and by an Amendment No. 15 to
Amended and Restated Loan and Security Agreement dated as of August 16, 1996
(the "Fifteenth PEC Amendment"). The Restated PEC Loan Agreement, as amended by
the First PEC Amendment, the Second PEC Amendment, the Third PEC Amendment, the
Fourth PEC Amendment, the Fifth PEC Amendment, the Sixth PEC Amendment, the
Seventh PEC Amendment, the Eighth PEC Amendment, the Ninth PEC Amendment, the
Tenth PEC Amendment, the Eleventh PEC Amendment, the Twelfth PEC Amendment, the
Thirteenth PEC Amendment, the Fourteenth PEC Amendment and the Fifteenth PEC
Amendment, is hereinafter collectively referred to as the "Existing PEC Loan
Agreement."

               D. GREFCO and Vacation Spa Resorts, Inc., a Tennessee corporation
("VSR"), entered into a Loan and Security Agreement dated as of March 30, 1989
(the "Original VSR Loan Agreement") that evidenced a loan from GREFCO to VSR.

               E. The Original VSR Loan Agreement was amended by an Amendment
Number One to Loan and Security Agreement and Promissory Note dated as of June
14, 1989 (the "First VSR Amendment"), an Amendment No. 2 to Loan and Security
Agreement dated as of April 16, 1990 (the "Second VSR Amendment"), an Amendment
No. 3 to Loan and Security Agreement dated as of May 31, 1991 (the "Third VSR
Amendment"), an Amendment No. 4 to Loan and Security Agreement dated as of
February 23, 1993 (the "Fourth VSR Amendment"), an Amendment No. 5 to Loan and
Security Agreement dated as of October 15, 1993 (the "Fifth VSR Amendment") and
an Amendment No. 6 to Loan and Security Agreement dated as of August 31, 1994
(the "Sixth VSR Amendment"), and an Amendment No. 7 to Loan and Security
Agreement dated as of August 16, 1996 (the "Seventh VSR Amendment"). The
Original VSR Loan Agreement, as amended by the First VSR Amendment, the Second
VSR Amendment, the Third VSR Amendment, the Fourth VSR Amendment, the Fifth VSR
Amendment, the Sixth VSR Amendment and the Seventh VSR Amendment, is hereinafter
collectively referred to as the "Existing VSR Loan Agreement."

               F. GREFCO was a wholly-owned subsidiary of Lender. Pursuant to a
plan of liquidation, GREFCO was liquidated into Lender. Further, pursuant to
such plan of liquidation, GREFCO assigned all of GREFCO's rights under the
Existing PEC Loan Agreement and under the Existing VSR Loan Agreement to Lender.

               G. Pursuant to that Agreement and Plan of Merger dated as of July
24, 1992 by and between Borrower and VSR, and those Articles of Merger of
Vacation Spa Resorts, Inc. with and into Preferred Equities Corporation dated as
of March 10, 1993, VSR was, effective March 11, 1993, merged into Borrower. As a
result of such merger, Borrower


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has succeeded to all rights and privileges of VSR and has become responsible and
liable for all liabilities and obligations of VSR.

               H. Pursuant to that certain Assumption Agreement (With Consent
and Agreement of Guarantor) dated June 28, 1993 between Lender and Borrower,
Borrower acknowledged and agreed that it was irrevocably and unconditionally
liable for the repayment of the loan made pursuant to the Existing VSR Loan
Agreement and for the payment, performance and observance of all of the
obligations, covenants and representations and warranties of VSR as set forth in
the Existing VSR Loan Agreement and in the documents executed in connection
therewith as if Borrower was an original party to such agreement and documents.

               I. Borrower and Lender have agreed to consolidate the Existing
PEC Loan Agreement and Existing VSR Loan Agreement (collectively the "Existing
Loan Agreement") and thereafter to further modify and amend and restate in its
entirety the Existing Loan Agreement, in accordance with the provisions of this
Second Amended and Restated and Consolidated Loan and Security Agreement. It is
the purpose and intent of Borrower and Lender that this Second Amended and
Restated and Consolidated Loan and Security Agreement shall set forth all
existing terms and conditions of the Loan described herein, and all previous and
prior terms, conditions and provisions of the Loan as set forth in the Existing
PEC Loan Agreement and the Existing VSR Loan Agreement are collectively merged
herein and all inconsistent or contrary provisions of the Existing PEC Loan
Agreement and/or the Existing VSR Loan Agreement shall be of no further force or
effect.

               J. Additionally, Borrower has requested, and Lender has agreed to
fund (pursuant to the terms and conditions of this Agreement), Advances under
the Mortgage Loan Facility to finance the acquisition and renovation of an
Additional Project consisting of three (3) buildings located at 184 Winnick
Avenue, 190 Winnick Avenue and 196 Winnick Avenue in Las Vegas, Nevada, more
particularly described in EXHIBIT "I-P" attached hereto (the "Second Winnick
Building Addition"), and including eighteen (18) time-share units. Borrower has
also requested, and Lender has agreed, in accordance with and subject to the
conditions of this Agreement, to make Advances of the Receivables Loan, from
time to time, against Instruments or Contracts arising from the Second Winnick
Building Addition.

               NOW, THEREFORE, in consideration of these recitals, the covenants
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which consideration are hereby acknowledged, Lender
and Borrower agree as follows:


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<PAGE>   4

                                    ARTICLE I

                                   DEFINITIONS

               Except where the context shall clearly otherwise require a
different interpretation, all capitalized terms used throughout this Agreement
shall have the meaning indicated or assigned to them, whether set forth above or
below or elsewhere in this Agreement.

               "ADDITIONAL PROJECT": shall mean the real property, together with
the buildings and improvements thereon, and interests and appurtenances thereto,
of any one or more additional time-share or lot projects which are specifically
approved by Lender pursuant to this Agreement .

               "ADDITIONAL PROJECT DEVELOPER": shall mean Borrower or one or
more Subsidiaries of Borrower from which the Borrower has acquired receivables
which are to become Receivables Collateral for or arising from the sale of a
Unit or Lot in a Project.

               "ADVANCE": shall mean the monies or funds advanced from time to
time by Lender to Borrower in accordance with the terms and conditions of this
Agreement.

               "AGENCY AGREEMENT": shall mean that certain Agency Agreement,
dated as of February 1, 1988, among Lender, Borrower and Collection Agent,
together with all exhibits and schedules attached thereto and all renewals,
extensions, amendments, replacements, restatements, supplements or modifications
from time to time made thereto.

               "AGREEMENT": shall mean this Second Amended and Restated and
Consolidated Loan and Security Agreement, together with all exhibits and
schedules attached hereto and all renewals, extensions, amendments,
replacements, restatements, supplements or modifications from time to time made
hereto or thereto.

               "ALOHA BAY": shall mean that certain time-share resort facility
commonly known as Aloha Bay, consisting of thirty-two (32) time-share units
located in Pinellas County, Florida, as more particularly described in EXHIBIT
"I-A" attached hereto.

               "ALOHA BAY MATURITY DATE": shall mean May 20, 1998.

               "ALOHA BAY MORTGAGE": shall mean that certain Mortgage,
Assignment of Rents and Proceeds and Security Agreement dated as of September
22, 1995 and recorded against Aloha Bay on September 26, 1995 as Instrument No.
95-241270, Book 9117, Page 280, Official Records of Pinellas County, Florida,
together with any modifications, amendments or supplements from time to time
made thereto, whether now or hereafter existing.


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               "ALOHA BAY NOTE": shall mean that certain Promissory Note of
Borrower dated as of September 22, 1995 in the original principal amount of
$3,600,000.00 evidencing the Advances of the Loan made by Lender to Borrower
with respect to Aloha Bay, together with any modifications, amendments,
restatements or supplements from time to time made thereto, whether now or
hereafter existing.

               "ALOHA BAY RELEASE FEES": shall have the meaning set forth in
PARAGRAPH 3.9 of this Agreement.

               "ANNUAL SERVICE FEES": shall mean those fees due under the terms
and conditions of the Contracts or Instruments payable by Purchasers to any
Trustee or to any Association for providing hotel services, maintenance,
repairs, replacements, tax payments, hazard insurance, and the like.

               "APPLICABLE TRUST": shall mean any Trust which has assigned to
Lender its right, title and interest in and to any Contract or Instrument.

               "APPLICABLE USURY LAW": shall mean the usury law applicable
pursuant to the choice of law of the parties set forth in ARTICLE XI, PARAGRAPH
11.10 hereof.

               "ASSIGNMENTS": shall mean and refer to the Assignment of
Instruments and the Assignment of Contracts delivered by Borrower and/or any
Trust with respect thereto to Lender concurrently with each Advance under the
terms of which Borrower unconditionally transfers and assigns, with full
recourse, and any Applicable Trust unconditionally transfers and assigns,
without recourse, all of Borrower's or such Trust's title and interest in and to
the Eligible Receivables described therein free and clear of all claims,
demands, liens and encumbrances of third parties, as collateral security for the
Loan, together with all documents and assignments issued in connection
therewith.

               "ASSOCIATION (FOUNTAINS)": shall mean the Grand Flamingo
Fountains Owners Association, a Nevada nonstock, nonprofit corporation.

               "ASSOCIATION (RENO)": shall mean the Reno Spa Resort Owners
Association, a Nevada nonstock, nonprofit corporation.

               "ASSOCIATION (SUITES)": shall mean the Grand Flamingo Suites
Owners Association, a Nevada nonstock, nonprofit corporation.

               "ASSOCIATION (TERRACES)": shall mean the Grand Flamingo Terraces
Owners Association, a Nevada nonstock, nonprofit corporation


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               "ASSOCIATION (TERRACES FOUR)": shall mean the Grand Flamingo
Terraces Four Owners Association, a Nevada nonstock, nonprofit corporation.

               "ASSOCIATION (TOWERS)": shall mean the Grand Flamingo Owners
Association, a Nevada nonstock, nonprofit corporation.

               "ASSOCIATION (VILLAS)": shall mean the Grand Flamingo Villas
Owners Association, a Nevada nonstock, nonprofit corporation.

               "ASSOCIATION (WINNICK)": shall mean the Grand Flamingo Winnick
Owners Association, a Nevada nonstock, nonprofit corporation.

               "ASSOCIATIONS": shall mean the Association (Fountains), the
Association (Reno), the Association (Suites), the Association (Terraces), the
Association (Terraces Four), the Association (Towers), the Association (Villas)
and the Association (Winnick), collectively.

               "BORROWER": shall mean Preferred Equities Corporation, a Nevada
corporation, with its principal place of business and mailing address at 4310
Paradise Road, Las Vegas, Nevada 89109.

               "BORROWING BASE": shall mean, as of the date of any determination
thereof, an amount equal to the lesser of (a) 85% of the unpaid principal
balance payable under the Eligible Receivables, or (b) 90% of the then present
value assigned to the unmatured installments of principal and interest payable
under the Eligible Receivables, discounted at Lender's prevailing discount rate
calculated as set forth in PARAGRAPH 7.6(I)(C); provided, however, that the
maximum Borrowing Base allocable to Eligible Receivables arising from the sale
of Units in Project (Reno) shall not in any event exceed $4,000,000.00; and
provided, further, that the maximum Borrowing Base allocable to Eligible
Receivables arising from the sale of Lots shall not in any event exceed
$35,000,000.00 in the aggregate; and provided, further, that the maximum
Borrowing Base allocable to Eligible Receivables arising from Unsolidified Lot
Sales shall be equal to 65% of the unpaid principal balance of all Eligible
Receivables consisting of Receivables Collateral constituting Unsolidified Lot
Sales, not to exceed at any time, however, the lesser of (i) an amount equal to
ten percent (10%) of the total unpaid principal balance of all Eligible
Receivables consisting of Receivables Collateral which are not constituted of
Unsolidified Lot Sales if the Borrowing Base allocable to Eligible Receivables
arising from the sale of Unsolidified Lot Sales exceeds at any time the amount
of $2,500,000.00, or (ii) $3,500,000.00.

               "CLOSING DATE": shall mean that date that all of the conditions
precedent described in ARTICLE XII below have been satisfied, which date shall
not occur later than May 15, 1997.


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<PAGE>   7

               "COLLECTION AGENT": shall mean Bank of America, N.T. & S.A., or
should such entity cease to act as collection agent under the Agency Agreement,
its successor as collection agent under the Agency Agreement.

               "CONTRACT": shall mean a contract of sale, for a fee or right to
use interest in a Unit or a Lot in any portion of the Project, which is assigned
to Lender.

               "CONTROL GROUP": shall mean:

                      (a) Guarantor and any successor thereof;

                      (b) Robert Nederlander, Jerome J. Cohen, Wilbur L. Ross,
        Jr., Eugene I. Schuster, Herbert B. Hirsch, Don A. Mayerson, John E.
        McConnaughy, Jr., or any of them; and

                      (c) Persons which beneficially own, directly or
        indirectly, five percent (5%) or more of the outstanding capital stock
        of any class or classes having by the terms thereof the ordinary voting
        power to elect a majority of the directors of Guarantor or Borrower
        (irrespective of whether at the time capital stock of any other class or
        classes of such corporation shall have or might have voting power by
        reason of the happening of any contingency).

               "CUSTODIAL AGREEMENT": shall mean that certain Custodial
Agreement, dated as of April 16, 1990, among Lender, Borrower, and Custodian,
substantially in the form of EXHIBIT "I-B" hereto, together with all exhibits
and schedules attached thereto and all renewals, extensions, amendments,
restatements, replacements, supplements or modifications from time to time made
thereto.

               "CUSTODIAN": shall mean Bank of America, N.T. & S.A., on behalf
of Bank of New York, in its sole capacity as custodian under the Custodial
Agreement, or should such entity cease to act as custodian under the Custodial
Agreement, its successor as custodian under the Custodial Agreement.

               "DOCUMENTS": shall mean the Receivables Note, the Ida Building
One Note, the Ida Building Two Note, the Office Note, the Aloha Bay Note, the
Winnick Building Addition Note, the Ida Building Addition Note, the Towers Note,
the Second Winnick Building Addition Note, the Guarantee, the Huerfano County
Deed of Trust, the Headquarters Deed of Trust, the FCFC Deed of Trust, the Ida
Building One Deed of Trust, the Ida Building Two Deed of Trust, the Aloha Bay
Mortgage, the Winnick Building Addition Deed of Trust, the Ida Building Addition
Deed of Trust, the Second Winnick Building Addition Deed of Trust, the
Assignments, the Contracts, the Instruments, the Agency Agreement, the Custodial
Agreement, the Oversight Agreement, this Agreement, and any and all other
documents and instruments executed in connection with the Loan, together


                                      -7-
<PAGE>   8


with any and all renewals, extensions, amendments, restatements or replacements
thereof, whether now or hereafter existing.

               "ELIGIBLE RECEIVABLES": shall mean Contracts and Instruments
which conform to the criteria and standards set forth in EXHIBIT "I-C" attached
hereto and by this reference incorporated herein; provided, however, that
Lender, in its sole discretion and upon terms and conditions satisfactory to
Lender, may waive specific criteria and/or standards with respect to certain
otherwise ineligible Instruments and Contracts; provided, however, that any such
waiver may be revoked, at any time, with respect to any such otherwise
ineligible Instruments or Contracts against which Advances are not outstanding.
An Instrument or Contract that has qualified as an Eligible Receivable shall
cease to be an Eligible Receivable upon the date of the occurrence of any of the
following: (a) any one installment due with respect to an Eligible Receivable
becomes more than fifty-nine (59) days past due, or (b) the Eligible Receivable
otherwise fails to continue to meet the requirements of an Eligible Receivable.

               "EVENT OF DEFAULT": the meaning set forth in ARTICLE IX hereof.

               "EXISTING PEC LOAN AGREEMENT": shall have the meaning set forth
in the Recitals to this Agreement.

               "EXISTING VSR LOAN AGREEMENT": shall have the meaning set forth
in the Recitals to this Agreement.

               "FCFC DEED OF TRUST": shall mean that certain Deed of Trust,
Assignment of Rents and Proceeds and Security Agreement dated as of June 5, 1996
and recorded against the FCFC Property on June 7, 1996 in Book 960607 as
Instrument No. 01797, Official Records of Clark County, Nevada, together with
any modifications, amendments or supplements from time to time made thereto,
whether now or hereafter existing.

               "FCFC PROPERTY": shall mean that certain office building located
at 1500 East Tropicana, Las Vegas, Nevada, and legally described in EXHIBIT
"I-D" attached hereto.

               "FCN": shall mean First Corporation of Nevada, a Nevada
corporation.

               "FPSI": shall mean FINOVA Portfolio Services, Inc., an Arizona
corporation, a wholly owned subsidiary of Lender, formerly known as GFC
Portfolio Services, Inc.

               "FOUNTAINS": shall mean that certain time-share resort facility
commonly known as Grand Flamingo Fountains, consisting of twelve (12) time-share
units and more particularly described on EXHIBIT "I-E" attached hereto.


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               "GAAP": shall mean generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board and such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination.

               "GFC": shall mean GRAND FLAMINGO CORPORATION, a Nevada
corporation.

               "GUARANTEE": shall mean that certain Amended and Restated
Guarantee and Subordination Agreement between Guarantor and Lender and dated as
of May 10, 1989.

               "GUARANTOR": shall mean Mego Financial Corp., a New York
corporation (formerly named Mego Corp.).

               "HEADQUARTERS BUILDING": shall mean that certain office building
located at 4310 Paradise Road, Las Vegas, Nevada, and more particularly
described in EXHIBIT "I-F" attached hereto.

               "HEADQUARTERS DEED OF TRUST": shall mean that certain Deed of
Trust, Assignment of Rents and Proceeds and Security Agreement, dated as of June
28, 1993, and recorded against the Headquarters Building on June 30, 1993 in
Book 930630, Instrument No. 02521, Official Records of Clark County, Nevada,
together with any and all amendments, supplements or modifications from time to
time made thereto, whether now or hereafter existing.

               "Huerfano County Deed of Trust": shall mean that certain Deed of
Trust, Assignment of Rents and Security Agreement, dated as of February 1, 1988,
which was delivered by Borrower to Lender and recorded against that portion of
the Project located in Huerfano County, Colorado on February 2, 1988 at
Reception No. 968 in Book M, Page 312, Official Records of Huerfano County,
Colorado, together with any and all amendments, supplements or modifications
from time to time made thereto, whether now or hereafter existing.

               "IDA BUILDING ADDITION": shall mean that certain time-share
resort facility located at 190 and 196 Ida Street, Las Vegas, Nevada, consisting
of twenty-four (24) time-share units and more particularly described in EXHIBIT
"I-G" attached hereto.

               "IDA BUILDING ADDITION DEED OF TRUST": shall mean that certain
Deed of Trust, Assignment of Rents and Proceeds and Security Agreement dated as
of December 13, 1995 and recorded against the Ida Building Addition on March 25,
1996 in Book 960325, Instrument No. 01233, Official Records of Clark County,
Nevada, together with any and all

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<PAGE>   10


amendments, supplements or modifications from time to time made thereto, whether
now or hereafter existing.

               "IDA  BUILDING  ADDITION  INCENTIVE  FEE":  shall have the
meaning set forth in PARAGRAPH 7.16 of this Agreement.

               "IDA BUILDING ADDITION MATURITY DATE": shall mean that date which
occurs twenty-four (24) months following the date that Lender makes the last
Advance under the Mortgage Loan Facility with respect to the Ida Building
Addition (or in the event there is no such day in the 24th month, on the last
day of such month).

               "IDA BUILDING ADDITION NOTE": shall mean that certain Promissory
Note of Borrower dated December 13, 1995, executed and delivered to Lender in
the amount of $1,500,000.00, evidencing Advances of the Loan made under the
Mortgage Loan Facility with respect to the Ida Building Addition, together with
any modifications, amendments, restatements or supplements from time to time
made thereto, whether now or hereafter existing.

               "IDA BUILDING ADDITION RELEASE FEE": shall have the meaning set
forth in PARAGRAPH 3.14 of this Agreement.

               "IDA BUILDING ONE": shall mean that certain time-share resort
facility located at 170 and 178 Ida Street, Las Vegas, Nevada, consisting of 48
time-share units and more particularly described in EXHIBIT "I-H" attached
hereto.

               "IDA BUILDING ONE DEED OF TRUST": shall mean that certain Deed of
Trust, Assignment of Rents and Proceeds and Security Agreement [Ida Building
One] dated as of January 26, 1995 and recorded against Ida Building One on
January 31, 1995 in Book 950131, Instrument No. 01454, Official Records of Clark
County, Nevada, together with any and all amendments, supplements or
modifications from time to time made thereto, whether now or hereafter existing.

               "IDA BUILDING ONE INCENTIVE FEE": shall have the meaning set
forth in PARAGRAPH 7.13 of this Agreement.

               "IDA BUILDING ONE MATURITY DATE":  shall mean January 31, 1998.

               "IDA BUILDING ONE NOTE": shall mean that certain Promissory Note
of Borrower dated as of January 26, 1995, executed and delivered to Lender in
the amount of $2,999,700.00, evidencing the Advances of the Loan made under the
Mortgage Loan Facility with respect to Ida Building One, together with any
modifications, amendments, restatements or supplements from time to time made
thereto, whether now or hereafter existing.


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<PAGE>   11


               "IDA BUILDING ONE RELEASE FEES": shall have the meaning set forth
in PARAGRAPH 3.12 of this Agreement.

               "IDA BUILDING TWO": shall mean that certain time-share resort
facility located at 165, 171 and 177 Ida Street, Las Vegas, Nevada, consisting
of 18 time-share units more particularly described in EXHIBIT "I-I" attached
hereto.

               "IDA BUILDING TWO DEED OF TRUST": shall mean that certain Deed of
Trust, Assignment of Rents and Proceeds and Security Agreement [Ida Building
Two] dated as of April 27, 1995 and recorded against Ida Building Two on May 26,
1995 in Book 950526, Instrument No. 01127, Official Records of Clark County,
Nevada, together with any and all amendments, supplements or modifications from
time to time made thereto, whether now or hereafter existing.

               "IDA BUILDING TWO INCENTIVE FEE": shall have the meaning set
forth in PARAGRAPH 7.14 of this Agreement.

               "IDA BUILDING TWO MATURITY DATE": shall mean January 31, 1998.

               "IDA BUILDING TWO NOTE": shall mean that certain Promissory Note
of Borrower dated as of April 27, 1995, executed and delivered to Lender in the
amount of $1,755,000.00, evidencing the Advances of the Loan made under the
Mortgage Loan Facility with respect to Ida Building Two, together with any
modifications, amendments, restatements or supplements from time to time made
thereto, whether now or hereafter existing.

               "IDA BUILDING TWO RELEASE FEES": shall have the meaning set forth
in PARAGRAPH 3.13 of this Agreement.

               "INSTRUMENT": shall collectively mean a Purchaser Note, the
Purchaser Mortgage which secures same and all other documents, instruments or
other writings whatsoever which evidence or secure the obligations and
indebtedness of a Purchaser of a Lot or Unit in the Project, and which is
assigned to Lender.

               "LICENSE AGREEMENT": shall have the meaning set forth in
PARAGRAPH 8.32 hereof.

               "LOAN": shall mean the lines of credit and other loans extended
by Lender to Borrower in accordance with the terms of this Agreement in a
principal amount not to exceed at any time outstanding the Maximum Loan Amount.

               "LOT": a lot in any Project as shown on the recorded subdivision
plat thereof.


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<PAGE>   12

               "MAXIMUM LOAN AMOUNT": shall mean Seventy-five Million United
States Dollars (U.S. $75,000,000.00).

               "MORTGAGE": shall mean a mortgage or deed of trust or other form
of indenture under the terms of which the Person executing and delivering such
Mortgage shall grant, convey, sell and assign to Lender a first lien upon real
property.

               "MORTGAGE LOAN FACILITY": shall mean that portion of the Loan not
to exceed $15,000,000.00 under which Advances may be made to Borrower on a
revolving basis in order to finance Borrower's acquisition and refurbishment of
time-share resort facilities. The Advances outstanding under the Mortgage Loan
Facility as of the Closing Date include the Advances of the Loan evidenced by
the Ida Building One Note, the Ida Building Two Note, the Ida Building Addition
Note, the Winnick Building Addition Note, the Second Winnick Building Addition
Note (to the extent that any Advances are made under the Second Winnick Building
Addition Note as of the Closing Date) and the Towers Note, but do not include
the amounts outstanding under the Aloha Bay Note and the Office Note.

               "MORTGAGE LOAN FACILITY BORROWING TERM": shall mean the period of
time during which Lender is committed to make Advances under the Mortgage Loan
Facility pursuant to this Agreement, which commitment shall terminate twelve
(12) months after the Closing Date.

               "MORTGAGE LOAN FACILITY MATURITY DATE": shall mean, with respect
to any Additional Project funded under the Mortgage Loan Facility, the date
which shall occur two (2) years after the date on which the last Advance is made
with respect to such Additional Project.

               "MORTGAGE LOAN FEE": shall mean a fee in an amount equal to
one-half percent (1/2%) of each of the Advances made by Lender to Borrower under
the Mortgage Loan Facility, which is due and payable in full by Borrower on the
date that each such Advance is made under the Mortgage Loan Facility.

               "NOTES": shall mean the Receivables Note, the Aloha Bay Note, the
Office Note, the Ida Building One Note, the Ida Building Two Note, the Ida
Building Addition Note, the Winnick Building Addition Note, the Second Winnick
Building Addition Note, the Towers Note, any other Project Note and any
additional promissory notes executed by Borrower executed and delivered to
Lender with respect to the Loan pursuant to the terms and conditions of this
Agreement.

               "OBLIGATIONS": shall mean each and every obligation, duty,
covenant, undertaking and condition which Borrower is required or has agreed to
perform under the Documents, and each and every other obligation of Borrower now
or hereafter owing to Lender.


                                      -12-

<PAGE>   13

               "OFFICE NOTE": shall mean the Second Amended and Restated
Promissory Note [Headquarters and FCFC Property] dated as of June 5, 1996,
executed and delivered to Lender in the original principal amount of
$6,773,778.74, evidencing the Advances made with respect to the FCFC Property
and the Headquarters Building, together with any modifications, amendments,
restatements or supplements from time to time made thereto, whether now or
hereafter existing.

               "OFFICE NOTE MATURITY DATE": shall mean July 1, 2003.

               "OVERDUE RATE": shall mean the interest rate payable by Borrower
under the terms of the Note for delinquent monthly installments or in the event
that an Event of Default occurs.

               "OVERSIGHT AGREEMENT": shall mean that certain Oversight and
Agency Agreement between Lender, Borrower and FPSI dated as of August 31, 1994,
as from time to time amended, renewed or restated.

               "PERFORM", "PERFORMED" or "PERFORMANCE": shall mean the timely,
faithful and complete payment and performance of all Obligations by the
Borrower.

               "PERMITTED ENCUMBRANCES": shall mean each and every restriction,
reservation and easement of record, inchoate mechanics' liens and inchoate liens
for taxes and assessments, which individually and in the aggregate do not render
title to the property which they encumber unmarketable.

               "PERSON": shall mean any adult individual, partnership,
corporation, trust, unincorporated organization or other form of business entity
whatsoever, or any government or agency or political subdivision thereof.

               "PROJECT": shall mean each of, or collectively, as the context
may require, the Winnick Building Addition, the Ida Building Addition, Aloha
Bay, Ida Building One, Ida Building Two, South Park Ranches, Suites Phase I,
Suites Phase II, Fountains, Winnick, the Second Winnick Building Addition,
Project (Reno), Project (Towers), Project (Villas), Project (Terraces-Phase 1),
Project (Terraces-Phase 2), any Additional Projects, and those certain real
estate developments which are owned by the Borrower or the Trustee, located in
Nye County and Clark County in the State of Nevada, and Huerfano County in the
State of Colorado, which are more particularly described in EXHIBIT "I-J"
hereto.

               "PROJECT (RENO)": shall mean the real property together with the
buildings and improvements thereon, and interests and appurtenances thereto, and
commonly known as the "Reno Spa Resort Club," as more particularly described in
EXHIBIT "I-K" hereto.


                                      -13-

<PAGE>   14

               "PROJECT (TERRACES-PHASE 1): shall mean the real property,
together with the buildings and improvements thereon, and interests and
appurtenances thereto, as more particularly described in EXHIBIT "I-L" hereto.

               "PROJECT (TERRACES-PHASE 2): shall mean the real property,
together with the buildings and improvements thereon, and interests and
appurtenances thereto, as more particularly described in EXHIBIT "I-M" hereto.

               "PROJECT (TOWERS)": shall mean the real property, together with
the buildings and improvements thereon, and interests and appurtenances thereto,
commonly known as the "Grand Flamingo Towers," as more particularly described in
EXHIBIT "I-N" hereto.

               "PROJECT (VILLAS)": shall mean the real property, together with
the buildings and improvements thereon, and interests and appurtenances thereto,
commonly known as the "Grand Flamingo Villas," as more particularly described in
EXHIBIT "I-O" hereto.

               "PROJECT INCENTIVE FEE": shall mean that Incentive Fee payable
with respect to each Additional Project for which Advances under the Mortgage
Loan Facility are made by Lender to Borrower, as more particularly described in
PARAGRAPH 7.19 of this Agreement.

               "PROJECT NOTE": shall have the meaning set forth in PARAGRAPH
2.3.6 below.

               "PROJECT RELEASE FEE": shall mean that release fee payable with
respect to each Additional Project under which Advances of the Mortgage Loan
Facility are made by Lender to Borrower, as more particularly described in
PARAGRAPH 3.17 of this Agreement.

               "PURCHASER": shall mean a Person who buys a Lot or Unit in any
Project from Borrower or an Additional Project Developer.

               "PURCHASER MORTGAGES": shall mean all deeds of trust, mortgages,
security agreements, financing statements, or other security instruments of
every type and nature on or affecting a Lot or Unit in any Project or any
interest therein and which secure the Contracts and Instruments assigned to
Lender or evidence any rights of Borrower or any Trust in or to such Contracts
or Instruments.

               "PURCHASER NOTE": shall mean a promissory note executed and
delivered by a Purchaser to evidence such Person's indebtedness to Borrower with
respect to the purchase of a Lot or Unit by such Purchaser.

               "RECEIVABLES BORROWING TERM": shall mean the period of time
during which Lender is committed to make Advances of the Receivables Loan under
this Agreement which commitment shall terminate on the first to occur of (a)
that date that is thirty-six (36) months 


                                      -14-

<PAGE>   15


after the date of the first Advance under the Receivables Loan after the Closing
Date, or (b) May 31, 2000.

               "RECEIVABLES COLLATERAL":  shall mean:

                      (a) all right, title and interest of Borrower, Trustee,
        any Co-Trustee or any other vendor in those certain Contracts and
        Instruments, whether now existing or hereafter arising, which are, now
        or hereafter, assigned, endorsed or delivered to Lender, or Lender's
        agent, (and which have not been reassigned by Lender) pursuant hereto or
        against which an Advance has been made (and replacements or
        substitutions thereof), including, without limitation, all proceeds,
        property, property rights, privileges and benefits arising out of, from
        the enforcement of, or in connection with the Contracts, Instruments,
        property rights or the policies of insurance referred to below,
        including, without limitation, all cash, checks, notes, chattel paper,
        drafts and other instruments for the payment of money, all property
        returned by or reclaimed or repossessed from customers, all rights of
        foreclosure, termination, dispossession, repossession, all documents,
        instruments, accounts, contracts, liens and security instruments and all
        guarantees relating to or arising out of the Contracts or Instruments
        whether such guarantees are given by individuals, corporations or
        partnerships or by any federal, state or local governmental or
        quasi-governmental entities, all collateral, security deposits, tax
        escrows and down payments (to the extent the same may be pledged under
        applicable law), or other security securing the obligations of any
        person under or relating to the Contracts or Instruments, all credit
        balances in favor of Borrower on Lender's books, and all rights and
        remedies of whatever kind or nature Borrower or any Trust may hold or
        acquire for the purpose of securing or enforcing the Contracts or
        Instruments, and all general intangibles relating to or arising out of
        the Contracts or Instruments or policies of insurance referred to below;
        provided, however, that the foregoing shall not include any Annual
        Service Fees or proceeds thereof;

                      (b) subject to the prior rights, if any, of third parties,
        all property rights relating to or arising out the Contracts or
        Instruments, policies of insurance relating to or arising out of such
        Contracts or Instruments (to the extent the same may be pledged under
        the Trust Agreements), including, without limitation, all general
        intangibles relating to or arising out of such policies of insurance,
        and all collateral, security deposits and down payments (to the extent
        the same may be pledged under applicable law), or other security
        securing the obligations of any Purchaser under or relating to such
        Contracts or Instruments;

                      (c) all proceeds of insurance (to the extent permitted by
        applicable law, the Trust Agreements and any declaration of covenants,
        conditions and restrictions), including, without limitation, property,
        casualty and title insurance,


                                      -15-

<PAGE>   16

        affecting such Contracts and Instruments or the portion of the Project 
        affected by such Contracts and Instruments or delivered in connection 
        therewith;

                      (d) all rights, if any, under escrow agreements and all
        impound and/or reserve accounts pertaining to the foregoing;

                      (e) all files, books and records of Borrower pertaining to
        any of the foregoing, including all records, ledgers, and computer
        programs, discs or tapes, files, printouts, runs and other computer
        prepared information indicating, summarizing, or evidencing such
        Contracts and Instruments or related to any Project; and

                      (f)    the proceeds from the foregoing.

               "RECEIVABLES LOAN": shall mean that portion of the Loan not to
exceed $75,000,000.00, less the aggregate outstanding principal balance of (a)
all Advances made under the Mortgage Loan Facility, (b) the Aloha Bay Note, and
(c) the Office Note.

               "RECEIVABLES LOAN FEE": shall mean that loan fee payable by
Borrower in consideration of Lender's execution of this Agreement and the
commitments made by Lender hereunder, in the amount of up to $250,000.00. A
portion of the Receivables Loan Fee in an amount equal to $180,000.00 shall be
paid by Borrower simultaneously with the first Advance under the Receivables
Loan after the Closing Date. The balance of the Receivables Loan Fee
($70,000.00) shall be paid if and when the outstanding principal balance of all
Advances of the Receivables Loan equals or exceeds $68,000,000.00.

               "RECEIVABLES MATURITY DATE": shall mean the date which shall
occur (a) seven (7) years after the date on which the last Advance of the
Receivables Loan is made under the terms of this Agreement with respect to
Receivables Collateral secured by Units, and (b) ten (10) years after the date
on which the last Advance of the Receivables Loan is made under the terms of
this Agreement with respect to Receivables Collateral secured by Lots.

               "RECEIVABLES NOTE": shall mean the "Second Amended and Restated
Promissory Note" evidencing the Receivables Loan, dated of even date herewith,
consolidating the indebtedness owed by Borrower under the Existing PEC Loan
Agreement and under the Existing VSR Loan Agreement, as further amended, renewed
and restated.

               "RELEASE CONDITIONS": shall mean the satisfaction of each of the
following conditions:

                      (a) No Event of Default shall have occurred or be
        continuing and no event shall then exist, which with notice, passage of
        time or both would constitute an Event of Default;


                                      -16-

<PAGE>   17

                      (b) The Unit or Lot to be released must have been sold by
        Borrower in the ordinary course of Borrower's business in a bona fide
        arms-length transaction;

                      (c) The Purchaser of the Unit or Lot shall not be
        affiliated with Borrower or with any of the Control Group;

                      (d) Lender shall have received a written request for such
        release in which Borrower certifies as to compliance with items (a)
        through (c) above, and further certifies that all other requirements for
        such release have been satisfied;

                      (e) Borrower has paid all of Lender's out-of-pocket
        expenses incurred in connection with such release and has submitted to
        Lender all necessary documents for the same.

For the purposes hereof, a Person shall be deemed affiliated with Borrower or
the Control Group if it is a shareholder, officer, director, agent, employee,
salesman, broker or creditor of Borrower or the Control Group, or relative of
Borrower or the Control Group or of any of the foregoing, or any other Person
related to or affiliated with Borrower or the Control Group, including, without
limitation, the Guarantor and any independent contractors.

               "SECOND WINNICK BUILDING ADDITION": shall have the meaning set
forth in Recital "J".

               "SECOND WINNICK BUILDING ADDITION ADVANCES": shall mean those
Advances against the Maximum Loan Amount and the Mortgage Loan Facility in the
amount of up to $1,818,000.00 made or to be made by Lender to Borrower, the
proceeds of which are to be used to pay a portion of Borrower's costs in
acquiring and renovating the Second Winnick Building Addition.

               "SECOND WINNICK BUILDING ADDITION DEED OF TRUST": shall mean that
certain Deed of Trust, Assignment of Rents and Proceeds and Security Agreement
dated of even date with this Agreement and to be recorded against the Second
Winnick Building Addition, together with any and all amendments, supplements or
modifications from time to time made thereto.

               "SECOND WINNICK BUILDING ADDITION INCENTIVE FEE": shall have the
meaning set fort in PARAGRAPH 7.18 of this Agreement.

               "SECOND WINNICK BUILDING ADDITION MATURITY DATE": shall mean that
date which occurs twenty-four (24) months following the date that Lender makes
the last Advance under the Mortgage Loan Facility with respect to the Second
Winnick Building Addition (or in the event there is no such day in the 24th
month, on the last day of such month).


                                      -17-

<PAGE>   18

               "SECOND WINNICK BUILDING ADDITION NOTE": shall mean that certain
Promissory Note of Borrower of even date with this Agreement, executed and
delivered to Lender in the amount of up to $1,818,000.00, evidencing the Second
Winnick Building Addition Advances.

               "SECOND WINNICK BUILDING ADDITION RELEASE FEES": shall have the
meaning set forth in PARAGRAPH 3.16 of this Agreement.

               "SECURITY": shall have the same meaning as set forth in Section
2(1) of the Securities Act of 1933, as amended.

               "SECURITY INTEREST": a direct and exclusive first priority
security interest or lien which has been perfected under the Uniform Commercial
Code, or applicable real property law of the state(s) in which any such security
interest or lien must be perfected; provided, however, that with respect to any
portion of the Receivables Collateral not covered by the Uniform Commercial
Code, it shall mean a direct and exclusive first lien on such property which has
been perfected in the manner provided by law.

               "SOUTH PARK RANCHES": shall mean that certain subdivision known
as South Park Ranches, located in Park County, Colorado, more fully described on
EXHIBIT "I-Q" attached hereto.

               "SUBSIDIARIES": shall mean, with respect to any Person: (a) any
corporation in which such Person, directly or indirectly through its
Subsidiaries, owns more than fifty percent (50%) of the outstanding capital
stock of any other class or classes having by the terms thereof the ordinary
voting power to elect a majority of the directors of such corporation's stock
(irrespective of whether at the time the capital stock of any class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency); and (b) any partnership, association, joint
venture, or other entity in which such Person, directly or indirectly through
its Subsidiaries, has more than a fifty percent (50%) equity interest at the
time.

               "SUITES PHASE I": shall mean that certain time-share resort
commonly known as Grand Flamingo Suites-Phase I located in Las Vegas, Nevada and
more fully described on EXHIBIT "I-R" attached hereto.

               "SUITES PHASE II": shall mean that certain time-share resort
commonly known as Grand Flamingo Suites-Phase II located in Las Vegas, Nevada
and more fully described on EXHIBIT "I-S" attached hereto.


                                      -18-

<PAGE>   19

               "TERM": shall mean the duration of this Agreement commencing as
of the year and day first above written and terminating on the date Borrower has
performed all of the Obligations required of or agreed to by Borrower under the
Documents.

               "TITLE COMPANY": shall mean a title insurance company acceptable
to Lender in its sole but reasonable discretion.

               "TITLE POLICY": shall mean a Lender's policy of title insurance
issued by a Title Company insuring the validity and priority of the lien of each
Purchaser's Mortgage against a Lot or Unit of a Purchaser, which is to be
assigned to Lender by Borrower hereunder, as a first lien upon the Lot or Unit,
or in the event that a Lot or Unit is the subject of a Contract, a Lender's
policy of title insurance issued by the Title Company insuring the validity and
priority of the lien of Lender's Mortgage against such Lot or Unit, as a first
lien upon the Lot or Unit. The term "Title Policy" shall also mean, as the
context may require, a Lender's Policy of Title Insurance issued by a Title
Company insuring the validity and priority of the lien of Lender's Mortgage
recorded against any real property owned by Borrower as additional security for
the performance by Borrower of its Obligations under this Agreement.

               "TOWERS ADVANCES": shall mean those Advances against the Maximum
Loan Amount and the Mortgage Loan Facility in the total amount of $1,286,126.00
made by Lender to Borrower, the proceeds of which were to be used to pay a
portion of Borrower's costs of the Towers Lobby Expansion.

               "TOWERS CLUB": shall have the meaning set forth in PARAGRAPH 8.32
hereof.

               "TOWERS LOBBY EXPANSION": shall mean the expansion, renovation
and refurbishment of the lobby area within the Towers Club.

               "TOWERS NOTE": shall mean that Promissory Note of Borrower dated
as of December 13, 1995, as amended pursuant to that Amendment No. 1 to
Promissory Note [Towers Lobby] dated as of August 16, 1996, evidencing the
Towers Advances, as may be further amended, restated, supplemented, replaced or
modified from time to time after the date hereof.

               "TOWERS NOTE PRINCIPAL REDUCTION FEE": shall have the meaning set
forth in SECTION 2.3.7.5.

               "TRUST (RENO)": shall mean the trust established pursuant to the
Trust Agreement (Reno).

               "TRUST (SUITES)": shall mean the trust established pursuant to
the Trust Agreement (Suites).


                                      -19-

<PAGE>   20

               "TRUST (TERRACES): shall mean the trust established pursuant to
the Trust Agreement (Terraces).

               "TRUST (TOWERS)": shall mean the trust established pursuant to
the Trust Agreement (Towers).

               "TRUST (VILLAS)": shall mean the trust established pursuant to
the Trust Agreement (Villas).

               "TRUST AGREEMENT (RENO)": shall mean that certain Amended,
Restated and Consolidated Trust Agreement-Reno Spa Resort Club, dated as of
March 19, 1990, among Trustee (Reno), VSR and the Association (Reno), together
with all exhibits and schedules attached thereto and all renewals, extensions,
amendments, reinstatements, replacements, supplements or modifications from time
to time made thereto.

               "TRUST AGREEMENT (SUITES)": shall mean that certain Trust
Agreement dated as of November 13, 1991, between the Trustee (Suites), and
Borrower, as trustor and beneficiary, together with all exhibits and schedules
attached thereto and all renewals, extensions, amendments, restatements,
replacements, supplements or modifications from time to time made thereto.

               "TRUST AGREEMENT (TERRACES)": shall mean that certain Trust
Agreement dated as of December 8, 1989 between Valley Bank of Nevada and VSR,
together with all exhibits and schedules attached thereto and all renewals,
extensions, amendments, restatements, replacements, supplements or modifications
from time to time made thereto.

               "TRUST AGREEMENT (TOWERS)": shall mean that certain Amended,
Restated and Consolidated Trust Agreement [Grand Flamingo Towers] dated as of
March 19, 1990, among Valley Bank of Nevada, VSR and Association (Towers),
together with all exhibits and schedules attached thereto and all renewals,
extensions, amendments, restatements, replacements, supplements or modifications
from time to time made thereto.

               "TRUST AGREEMENT (VILLAS)": shall mean that certain Amended,
Restated and Consolidated Trust Agreement [Grand Flamingo Villas] dated as of
March 19, 1990, among Valley Bank of Nevada, VSR and Association (Villas),
together with all exhibits and schedules attached thereto and all renewals,
extensions, amendments, restatements, replacements, supplements or modifications
from time to time made thereto.

               "TRUST AGREEMENTS": shall mean the Trust Agreement (Reno), the
Trust Agreement (Towers), the Trust Agreement (Terraces), the Trust Agreement
(Villas) and the Trust Agreement (Suites), collectively.


                                      -20-

<PAGE>   21

               "TRUST AGREEMENTS (LAS VEGAS)": shall mean the Trust Agreement
(Towers), the Trust Agreement (Villas), the Trust Agreement (Terraces) and the
Trust Agreement (Suites), collectively.

               "TRUSTEE": shall mean the respective Trustee or Trustees under
each of the Trust Agreements or its successor as trustee or attorney-in-fact, as
applicable.

               "TRUSTEE (RENO)": shall mean Bank of America, N.T. & S.A., a
national banking corporation (successor-in-interest to Valley Bank of Nevada),
in its capacity as Trustee of the Trust Agreement (Reno), its successors and
assigns.

               "TRUSTEE (SUITES)": shall mean Bank of America, N.T. & S.A., a
national banking corporation, in its sole capacity as trustee under the Trust
Agreement (Suites), or should such entity cease to act as trustee under the
Trust Agreement (Suites), its successor as trustee under the Trust Agreement
(Suites).

               "TRUSTEE (TERRACES)": shall mean Bank of America, N.T. & S.A., a
national banking association, in its sole capacity as trustee under the Trust
Agreement (Terraces), or should such entity cease to act as trustee under the
Trust Agreement (Terraces), its successor as trustee under the Trust Agreement
(Terraces).

               "TRUSTEE (TOWERS)": shall mean Bank of America, N.T. & S.A., a
national banking association, in its sole capacity as trustee under the Trust
Agreement (Towers), or should such entity cease to act as trustee under the
Trust Agreement (Towers), its successor as trustee under the Trust Agreement
(Towers).

               "TRUSTEE (VILLAS)": shall mean Bank of America, N.T. & S.A., a
national banking association, in its sole capacity as trustee under the Trust
Agreement (Villas), or should such entity cease to act as trustee under the
Trust Agreement (Villas), its successor as trustee under the Trust Agreement
(Villas).

               "TRUSTS": shall mean the Trust (Reno), the Trust (Towers), the
Trust (Terraces), the Trust (Villas) and Trust (Suites), collectively.

               "UNIT": shall mean a real property fee or right-to-use interest
in all or a portion of the Project or any Additional Project which permits the
purchaser or owner thereof the right to occupy a dwelling unit therein for a
one-week interval of time during the calendar year or in which such purchaser or
owner has an interest as a tenant-in-common in such dwelling unit and related
undivided interest in common elements appurtenant thereto, together with the
right to use such unit for a one-week period of time during any calendar year.


                                      -21-

<PAGE>   22


               "UNSOLIDIFIED LOT SALES": shall mean an Instrument or Contract
which arises out of the sale of a Lot by Borrower to a Purchaser where such
Purchaser has not personally inspected the Lot with a representative of Borrower
and where the Instrument or Contract provides a specific period of time after
the date of purchase (the "Rescission Period") within which the Purchaser may
cancel the Instrument or Contract as a result of the fact that the Purchaser had
not inspected the Lot prior to purchase. An Instrument or Contract shall cease
to be deemed to be an Unsolidified Lot Sale after the expiration of the
Rescission Period in the event that the Purchaser has not canceled or otherwise
rescinded the Instrument or Contract.

               "UPGRADE": shall mean the process whereby a Purchaser has
arranged for the termination or modification of an existing Contract or
Instrument with respect to a certain Lot or Unit and has simultaneously entered
into a new or revised Contract or Instrument for the purchase of a more
expensive Lot or Unit. In no event shall an Upgrade mean rewriting of an
existing Contract or Instrument, or the entering into of a new Contract or
Instrument, so as to eliminate the default of the contract obligor thereunder.

               "VSR": shall have the meaning set forth in the Recitals in this
Agreement.

               "WINNICK": shall mean that certain time-share resort facility
commonly known as Grand Flamingo Winnick, consisting of twelve (12) time-share
units and more particularly described in EXHIBIT "I-T" attached hereto.

               "WINNICK BUILDING ADDITION": shall mean that certain time-share
resort facility commonly known as Plaza, consisting of twenty-two (22)
time-share units and more particularly described in EXHIBIT "I-U" attached
hereto.

               "WINNICK BUILDING ADDITION DEED OF TRUST": shall mean that
certain Deed of Trust, Assignment of Rents and Proceeds and Security Agreement
dated as of December 13, 1995 and recorded against the Winnick Building Addition
on March 25, 1996 in Book 960325, Instrument No. 01237, Official Records of
Clark County, Nevada, together with any and all amendments, supplements or
modifications from time to time made thereto, whether now or hereafter existing.

               "WINNICK BUILDING ADDITION INCENTIVE FEE": shall have the meaning
set forth in PARAGRAPH 7.17 of this Agreement.

               "WINNICK BUILDING ADDITION MATURITY DATE": shall mean February
28, 1999.

               "WINNICK BUILDING ADDITION NOTE": shall mean that certain
Promissory Note of Borrower dated as of December 13, 1995, executed and
delivered to Lender in the amount of $2,100,000.00, evidencing the Advances of
the Loan made under the Mortgage


                                      -22-

<PAGE>   23

Loan Facility made with respect to the Winnick Building Addition, together with
any modifications, amendments, restatements or supplements from time to time
made thereto, whether now or hereafter existing.

               "WINNICK BUILDING ADDITION RELEASE FEES": shall have the meaning
set forth in PARAGRAPH 3.15 of this Agreement.

                                   ARTICLE II

                                    THE LOAN

               2.1 THE LOAN. Subject to the terms and conditions of this
Agreement, Lender hereby agrees to make a Loan to Borrower in the amounts and
for the purposes hereinafter described. The Loan shall be constituted of the
Receivables Loan, the Mortgage Loan Facility, a $3,600,000.00 nonrevolving
mortgage loan previously made with respect to Aloha Bay (the "Aloha Bay Loan"),
and a $6,773,778.74 nonrevolving mortgage loan previously made with respect to
the Headquarters Building and the FCFC Property (the "Office Loan").

               2.2 RECEIVABLES LOAN. Upon Borrower's request, subject to the
conditions precedent stated in ARTICLE V hereof and elsewhere in this Agreement,
Lender hereby agrees that the Receivables Loan will be disbursed to Borrower,
from time to time, in periodic advances, but in no event after the Receivables
Borrowing Term has expired, in amounts not to exceed those determined by
subtracting (a) the difference between the unpaid principal balance outstanding
under the Loan at the time of each Advance over the outstanding principal
balance of the aggregate of (i) Advances made under the Mortgage Loan Facility,
(ii) the Aloha Bay Loan, and (iii) the Office Loan, from (b) the Borrowing Base,
determined as of the date thereof after giving effect to all Eligible
Receivables then assigned to (and not reassigned by) Lender; provided, however,
that the outstanding principal amount of the Loan shall not exceed at any time
the Maximum Loan Amount, and; provided, further, that the principal amount of
any and all indebtedness of Borrower to Lender which is secured by Receivables
Collateral encumbering Lots shall not exceed $35,000,000.00.

                      2.2.1 Advances of the Receivables Loan will not be made
        more frequently than once every month in amounts of not less than
        $100,000.00.

                      2.2.2 No Advances under the Receivables Loan will be made
        after the Receivables Borrowing Term has expired unless Lender, in its
        sole discretion, shall agree in writing to make additional Advances.

                      2.2.3 Borrower shall use the proceeds of the Receivables
        Loan for purposes of providing working capital to Borrower.


                                      -23-

<PAGE>   24

                      2.2.4 Except as hereinafter set forth, payments of
        principal and interest outstanding under the Receivables Loan shall be
        made in accordance with the terms and provisions of the Receivables
        Note.

                      2.2.5 Lender's obligation to make Advances of the
        Receivables Loan, from time to time, against Instruments or Contracts
        arising from the sale of Lots or Units in any Project is subject to and
        conditioned upon such Instruments or Contracts qualifying as Eligible
        Receivables and is furthermore subject to and conditioned upon the
        satisfaction of all other conditions precedent to the making of the
        Advance, as set forth in this Agreement. In connection therewith, but
        without limiting the generality of the foregoing, Lender's obligation to
        make Advances of the Receivables Loan against Instruments or Contracts
        arising from the sale of Lots or Units in any Additional Project is
        subject to Lender's receipt and approval of copies of the
        registrations/consents to sell/public offering statements/prospectuses
        and/or approvals thereof required to be issued by or used in all
        jurisdictions in which such Lots or Units will be offered for sale.

                      2.2.6 Notwithstanding anything contained in this Agreement
        or in any other agreement between Lender and Borrower, Lender shall have
        no obligation, under any circumstances, to make any Advance of the
        Receivables Loan with respect to any Eligible Receivable arising from
        the sale of Lot 26, Filing 54, in South Park Ranches.

               2.3 MORTGAGE LOAN FACILITY. Upon Borrower's request, and subject
to the conditions precedent stated in PARAGRAPH 5.2.2 hereof and elsewhere in
this Agreement, Lender hereby agrees that Advances under the Mortgage Loan
Facility will be disbursed to Borrower, from time to time, in periodic Advances,
but in no event after the Mortgage Loan Facility Borrowing Term has expired, in
amounts not to exceed ninety percent (90%) of the total bona fide out-of-pocket
costs and expenses incurred by Borrower in acquiring and renovating any Project
which has been approved by Lender (exclusive of any overhead of or profits to
Borrower or any of the Control Group (for the purposes of the foregoing, the
term "overhead" shall not be deemed to include reasonable and customary salaries
paid to employees of Borrower performing renovations with respect to such
Project)); provided, however, that the outstanding principal amount of all
Advances made under the Mortgage Loan Facility at any time shall not exceed
$15,000,000.00.

                      2.3.1 Advances under the Mortgage Loan Facility shall not
        be made more frequently than once every month.

                      2.3.2 No Advances under the Mortgage Loan Facility will be
        made after the Mortgage Loan Facility Borrowing Term has expired unless
        Lender, in its sole discretion, shall agree in writing to make
        additional Advances thereunder.


                                      -24-

<PAGE>   25

                      2.3.3 Borrower shall use the proceeds of Advances made
        under the Mortgage Loan Facility for the purposes of acquiring,
        renovating and refurbishing Projects and Additional Projects which have
        been approved by Lender. Lender and Borrower hereby acknowledge and
        agree that Lender shall have no obligation to approve Additional
        Projects for funding under the Mortgage Loan Facility unless Lender has
        otherwise inspected and approved such Additional Project in its sole
        discretion, and Borrower has agreed that, if so approved by Lender,
        Lender shall have the right to elect to make Advances under the
        Receivables Loan against Eligible Receivables arising from Instruments
        or Contracts resulting from the sale of Units in such Additional
        Project.

                      2.3.4 Advances under the Mortgage Loan Facility shall not
        be made with respect to any Projects consisting of Lots.

                      2.3.5 Disbursements of any Advances requested by Borrower
        under the Mortgage Loan Facility shall be made in accordance with
        Lender's customary construction draw procedures and guidelines then in
        effect with respect to construction loans, or as reimbursements for
        amounts expended by Borrower as established by evidence satisfactory to
        Lender.

                      2.3.6 Except as otherwise provided in this Agreement,
        payments of principal and interest outstanding under any Advances made
        under the Mortgage Loan Facility shall be made in accordance with the
        terms and provisions of a separate promissory note to be executed by
        Borrower and delivered to Lender at the time of the initial Advance made
        by Lender under the Mortgage Loan Facility with respect to the
        Additional Project (hereinafter, a "Project Note"). Unless otherwise
        agreed by Lender and Borrower, the terms and conditions of each such
        Project Note shall be as set forth in that form of Project Note attached
        hereto as EXHIBIT 2.3.6. Each Project Note shall be in a principal
        amount equal to the total amount of Advances under the Mortgage Loan
        Facility available to Borrower with respect to such Additional Project,
        shall accrue interest at an annual interest rate equal to Prime (as
        defined in the Project Note) plus two percent (2%) per annum, subject to
        adjustment on each Interest Rate Change Date (as described in the
        Project Note). Each Project Note shall be repaid through the payment to
        Lender of Project Release Fees and shall be paid in full as of the
        applicable Mortgage Loan Facility Maturity Date. For purposes of this
        Agreement, the Ida Building Addition Note, the Ida Building One Note,
        the Ida Building Two Note, the Winnick Building Addition Note, the
        Second Winnick Building Addition Note and the Towers Note shall be
        deemed to be Project Notes. Notwithstanding the provisions of PARAGRAPH
        7.3.1 of this Agreement, Borrower shall have no right to prepay any
        Project Note other than as set forth in the respective Project Note.
        Notwithstanding anything contained herein to the contrary, the
        outstanding obligations of Borrower under the Aloha Bay Loan and the
        Office Loan


                                      -25-

<PAGE>   26

        shall not be part of the Mortgage Loan Facility and shall not reduce or 
        limit the total Advances available to Borrower under the Mortgage Loan 
        Facility.

                      2.3.7  EXISTING PROJECT NOTES.

                             2.3.7.1 IDA BUILDING ONE NOTE. Lender and Borrower
               hereby agree that, notwithstanding any provision to the contrary
               in this Agreement, the terms and conditions of the Ida Building
               One Note and this PARAGRAPH 2.3.7.1 shall apply with respect to
               repayment of the Ida Building One Note. Notwithstanding the
               provisions of PARAGRAPH 7.3.1 of this Agreement, Borrower shall
               have no right to prepay the Ida Building One Note, other than
               through the application of Ida Building One Release Fees against
               the principal balance thereof, as provided below. The principal
               balance of the Ida Building One Note shall be repaid as follows:
               At such time as Borrower conveys a Unit in Ida Building One to a
               Purchaser, Borrower shall make a principal reduction payment to
               Lender under the Ida Building One Note in an amount equal to the
               Ida Building One Release Fee. Notwithstanding anything herein to
               the contrary, if not sooner paid, the entire remaining balance of
               the Ida Building One Note, together with all accrued and unpaid
               interest and all other sums due and owing thereon, shall be due
               and payable in full on the Ida Building One Maturity Date. Ida
               Building One Release Fees paid to Lender in connection with the
               release of Units from the Security Interests shall be applied
               toward the next principal installment to become due under the Ida
               Building One Note.

                             2.3.7.2 IDA BUILDING TWO NOTE. Lender and Borrower
               hereby agree that, notwithstanding any provision to the contrary
               in this Agreement, the terms and conditions of the Ida Building
               Two Note and this PARAGRAPH 2.3.7.2 shall apply with respect to
               repayment of the Ida Building Two Note. Notwithstanding the
               provisions of PARAGRAPH 7.3.1 of this Agreement, Borrower shall
               have no right to prepay the Ida Building Two Note, other than
               through the application of Ida Building Two Release Fees against
               the principal balance thereof, as provided below. The principal
               balance of the Ida Building Two Note shall be repaid as follows:
               At such time as Borrower conveys a Unit in Ida Building Two to a
               Purchaser, Borrower shall make a principal reduction payment to
               Lender under the Ida Building Two Note in an amount equal to the
               Ida Building Two Release Fee. Notwithstanding anything herein to
               the contrary, if not sooner paid, the entire remaining balance of
               the Ida Building Two Note, together with all accrued and unpaid
               interest and all other sums due and owing thereon, shall be due
               and payable in full on the Ida Building Two Maturity Date. Ida
               Building Two Release Fees paid to Lender in connection with the
               release of Units from the Security Interests shall be 


                                      -26-

<PAGE>   27

               applied toward the next principal installment to become due under
               the Ida Building Two Note.

                             2.3.7.3 IDA BUILDING ADDITION NOTE. Lender hereby
               agrees that Borrower shall continue to have the right to receive
               Advances under the Mortgage Loan Facility with respect to the Ida
               Building Addition provided that the Borrower satisfies the
               following requirements for such Advances which are set forth in
               EXHIBIT 5.2.2 in connection therewith: 15, 18, 19, 20 and 21, and
               provides to Lender a Request for Advance and Certification as
               described in PARAGRAPH 5.8 below. Borrower shall not be entitled
               to receive any further Advances under the Mortgage Loan Facility
               with respect to the Ida Building Addition after December 31,
               1997. Lender and Borrower hereby agree that, notwithstanding any
               provisions to the contrary in this Agreement, the terms and
               conditions of the Ida Building Addition Note and this PARAGRAPH
               2.3.7.3 shall apply with respect to the repayment of the Ida
               Building Addition Note. Notwithstanding the provisions of
               PARAGRAPH 7.3.1 of this Agreement, Borrower shall have the right
               to prepay the Ida Building Addition Note only in the event and
               upon the condition that Borrower (a) pays all sums due and
               payable to Lender in connection with the Ida Building Addition
               Note, (b) has given Lender at least thirty (30) days prior
               written notice of the prepayment, and (c) pays to Lender at the
               time of prepayment a prepayment premium equal to one percent (1%)
               of the then unpaid principal balance of the Ida Building Addition
               Note, together with any unpaid portion of the Ida Building
               Addition Incentive Fee as described in PARAGRAPH 7.16 below.
               Except as provided in the foregoing, Borrower shall have no right
               to prepay the Ida Building Addition Note, other than through the
               application of Ida Building Addition Release Fees against the
               principal balance thereof, as provided below. The principal
               balance of the Ida Building Addition Note shall be repaid as
               follows: At such time as Borrower conveys a Unit in the Ida
               Building Addition to a Purchaser, Borrower shall make a principal
               reduction payment to Lender under the Ida Building Addition Note
               in an amount equal to the Ida Building Addition Release Fee.
               Notwithstanding anything herein to the contrary, if not sooner
               paid, the entire remaining balance of the Ida Building Addition
               Note, together with all accrued and unpaid interest and all other
               sums due and owing thereon, shall be due and payable in full on
               the Ida Building Addition Maturity Date. Ida Building Addition
               Release Fees paid to Lender in connection with the release of
               Units from the Security Interests shall be applied toward the
               next principal installment to become due under the Ida Building
               Addition Note.

                             2.3.7.4 WINNICK BUILDING ADDITION NOTE. Lender and
               Borrower hereby agree that, notwithstanding any provisions to the
               contrary in this Agreement, the terms and conditions of the
               Winnick Building Addition


                                      -27-

<PAGE>   28

               Note and this PARAGRAPH 2.3.7.4 shall apply with respect to the
               repayment of the Winnick Building Addition Note. Notwithstanding
               the provisions of PARAGRAPH 7.3.1 of this Agreement, Borrower
               shall have the right to prepay the Winnick Building Addition Note
               only in the event and upon the condition that Borrower (a) pays
               all sums due and payable to Lender in connection with the Winnick
               Building Addition Note, (b) has given Lender at least thirty (30)
               days prior written notice of the prepayment, and (c) pays to
               Lender at the time of prepayment a prepayment premium equal to
               one percent (1%) of the then unpaid principal balance of the
               Winnick Building Addition Note, together with any unpaid portion
               of the Winnick Building Addition Incentive Fee as described in
               PARAGRAPH 7.17 below. Except as provided in the foregoing,
               Borrower shall have no right to prepay the Winnick Building
               Addition Note, other than through the application of Winnick
               Building Addition Release Fees against the principal balance
               thereof, as provided below. The principal balance of the Winnick
               Building Addition Note shall be repaid as follows: At such time
               as Borrower conveys a Unit in the Winnick Building Addition to a
               Purchaser, Borrower shall make a principal reduction payment to
               Lender under the Winnick Building Addition Note in an amount
               equal to the Winnick Building Addition Release Fee.
               Notwithstanding anything herein to the contrary, if not sooner
               paid, the entire remaining balance of the Winnick Building
               Addition Note, together with all accrued and unpaid interest and
               all other sums due and owing thereon, shall be due and payable in
               full on the Winnick Building Addition Maturity Date. Winnick
               Building Addition Release Fees paid to Lender in connection with
               the release of Units from the Security Interests shall be applied
               toward the next principal installment to become due under the
               Winnick Building Addition Note.

                             2.3.7.5 TOWERS NOTE. Lender and Borrower hereby
               agree that, notwithstanding any provision to the contrary in this
               Agreement, the terms and conditions of the Towers Note and this
               PARAGRAPH 2.3.7.5 shall apply with respect to repayment of the
               Towers Note. Notwithstanding the provisions of PARAGRAPH 7.3.1 of
               this Agreement, Borrower shall have the right to prepay the
               Towers Note only in the event and upon the condition that
               Borrower (a) pays all sums due and payable to Lender in
               connection with the Towers Note, (b) has provided Lender with at
               least thirty (30) days prior written notice of the prepayment,
               and (c) pays to Lender at the time of prepayment a prepayment
               premium equal to one percent (1%) of the then unpaid principal
               balance of the Towers Note. Except as provided in the foregoing,
               Borrower shall have no right to prepay the Towers Note, other
               than through the application of Towers Note Principal Reduction
               Fees against the principal balance thereof, as hereinafter
               provided. The principal balance of the Towers Note shall be
               repaid as follows: At such time as Borrower conveys a Unit in Ida
               Building One, Ida Building Two, the Winnick Building Addition or
               the Ida 

                                      -28-

<PAGE>   29

               Building Addition to a Purchaser at any time after (a) thirty
               (30) days after the last Towers Advance is made to Borrower, or
               (b) November 30, 1998, whichever occurs first, Borrower shall
               make a principal reduction payment to Lender under the Towers
               Note in an amount equal to $350.00 (the "Towers Note Principal
               Reduction Fee"). The Towers Note Principal Reduction Fee shall be
               paid to Lender simultaneously with the payment of the Ida
               Building One Release Fee, Ida Building Two Release Fee, Winnick
               Building Addition Release Fee or the Ida Building Addition
               Release Fee, as the case may be, until the Towers Note is paid in
               full, whereupon the Towers Note Principal Reduction Fee shall no
               longer be required to be paid in connection with the
               foregoing-described release fees. Notwithstanding anything herein
               to the contrary, if not sooner paid, the entire remaining balance
               of the Towers Note, together with all accrued and unpaid interest
               and all other sums due and owing thereon, shall be due and
               payable in full on the earlier of (i) that date which occurs
               twenty-five (25) months following the date that Lender makes the
               last Towers Advance (or in the event there is no such day in the
               25th month, on the last day of such month), or (ii) November 30,
               1998. Towers Note Principal Reduction Fees paid to Lender in
               connection with the release of Units from the Security Interests
               shall be applied toward the next principal installment to become
               due under the Towers Note.

                             2.3.7.6 SECOND WINNICK BUILDING ADDITION NOTE.
               Lender and Borrower hereby agree that, notwithstanding any
               provisions to the contrary in this Agreement, the terms and
               conditions of the Second Winnick Building Addition Note and this
               PARAGRAPH 2.3.7.6 shall apply with respect to the repayment of
               the Second Winnick Building Addition Note. Notwithstanding the
               provisions of PARAGRAPH 7.3.1 of this Agreement, Borrower shall
               have the right to prepay the Second Winnick Building Addition
               Note only in the event and upon the condition that Borrower (a)
               pays all sums due and payable to Lender in connection with the
               Second Winnick Building Addition Note, (b) has given Lender at
               least thirty (30) days prior written notice of the prepayment,
               and (c) pays to Lender at the time of prepayment a prepayment
               premium equal to one percent (1%) of the then unpaid principal
               balance of the Second Winnick Building Addition Note, together
               with any unpaid portion of the Second Winnick Building Addition
               Incentive Fee as described in PARAGRAPH 7.18 below. Except as
               provided in the foregoing, Borrower shall have no right to prepay
               the Second Winnick Building Addition Note, other than through the
               application of Second Winnick Building Addition Release Fees
               against the principal balance thereof, as provided below. The
               principal balance of the Second Winnick Building Addition Note
               shall be repaid as follows: At such time as Borrower conveys a
               Unit in the Second Winnick Building Addition to a Purchaser,
               Borrower shall make a principal reduction payment to Lender under
               the Second Winnick Building Addition Note in an 


                                      -29-

<PAGE>   30

               amount equal to the Second Winnick Building Addition Release Fee.
               Notwithstanding anything herein to the contrary, if not sooner
               paid, the entire remaining balance of the Second Winnick Building
               Addition Note, together with all accrued and unpaid interest and
               all other sums due and owing thereon, shall be due and payable in
               full on the Second Winnick Building Addition Maturity Date.
               Second Winnick Building Release Fees paid to Lender in connection
               with the release of Units from the Security Interests shall be
               applied toward the next principal installment to become due under
               the Second Winnick Building Addition Note.

               2.4 OFFICE LOAN. Borrower hereby acknowledges that it has
received all Advances of the Loan that it has requested and/or shall ever be
entitled to under the Office Loan. Lender and Borrower hereby agree that,
notwithstanding any provisions to the contrary in this Agreement, the terms and
conditions of the Office Note shall apply with respect to the repayment of the
Office Loan. All Obligations of Borrower arising under or evidenced by the
Office Note, if not sooner paid, shall be due and payable in full on the Office
Note Maturity Date. Notwithstanding the provisions of PARAGRAPH 7.3.1 of this
Agreement, Borrower shall have no right to prepay the Office Note other than as
set forth in the Office Note.

               2.5 ALOHA BAY LOAN. Borrower hereby acknowledges that it has
received all Advances of the Loan that it has requested and/or shall ever be
entitled to under the Aloha Bay Loan. Lender and Borrower hereby agree that,
notwithstanding any provisions to the contrary in this Agreement, the terms and
conditions of the Aloha Bay Note and this PARAGRAPH 2.5 shall apply with respect
to the repayment of the Aloha Bay Loan. Notwithstanding the provisions of
PARAGRAPH 7.3.1 of this Agreement, Borrower shall have no right to prepay the
Aloha Bay Note, other than through the application of Aloha Bay Release Fees
against the principal balance thereof, as provided below. The principal balance
of the Aloha Bay Note shall be repaid as follows: At such time as Borrower
conveys a Unit in Aloha Bay to a Purchaser, Borrower shall make a principal
reduction payment to Lender under the Aloha Bay Note in an amount equal to the
Aloha Bay Release Fee. Notwithstanding anything herein to the contrary, if not
sooner paid, the entire remaining balance of the Aloha Bay Note, together with
all accrued and unpaid interest and all other sums due and owing thereon, shall
be due and payable in full on the Aloha Bay Maturity Date. Aloha Bay Release
Fees paid to Lender in connection with the release of Units from the Security
Interests shall be applied toward the next principal installment to become due
under the Aloha Bay Note.

               2.6 All Advances of the Loan, whether made under the Receivables
Loan and evidenced by the Receivables Note, or made under the Mortgage Loan
Facility and evidenced by a Project Note, or made under the Aloha Bay Loan and
evidenced by the Aloha Bay Note or made under the Office Loan and evidenced by
the Office Note, shall be deemed to be a single Loan.


                                      -30-

<PAGE>   31

                                   ARTICLE III

                              SECURITY FOR THE LOAN

               3.1 (a) As security for Borrower's Performance of all Obligations
        owed to Lender under the Documents, Borrower and Trustees hereby grant,
        transfer and assign to Lender a Security Interest in and to all of
        Borrower's right, title and interest in and to all of the following:

                       (i) all Receivables Collateral, whether now existing or
               hereafter arising;

                       (ii) all Purchaser Mortgages, whether now existing or
               hereafter arising;

                       (iii) all Title Policies, whether now existing or
               hereafter arising, insuring any of the Purchaser Mortgages; and

                       (iv) the proceeds from the foregoing; and

               Lender's Security Interest in such Receivables Collateral shall
               be absolute, continuing and applicable to all existing and future
               Advances and shall secure the repayment of the Loan and the
               Performance of all Obligations throughout the Term of the Loan.

                    (b) As further security for Borrower's payment and
        Performance of all Obligations owed to Lender under the Documents,
        Borrower hereby grants, transfers and assigns to Lender a Security
        Interest in and to all of Borrower's right, title and interest in and to
        all of the following:

                       (i) All right, title and interest of Borrower in and to
               all of the Trusts, whether such interest be as trustor,
               beneficiary, or otherwise;

                       (ii) All distributions not distributed prior to an Event
               of Default, property, property rights, privileges, contract
               rights, accounts, general intangibles, and benefits of Borrower
               arising out of or from any of the Trusts or any such trust
               corpus;

                       (iii) The proceeds from the foregoing; and


                                      -31-
<PAGE>   32


                       (iv) Borrower's rights as "declarant," "developer,"
               "owner" or otherwise under the governing documents or restrictive
               covenants affecting any Project, if any, including, without
               limitation, owners' association charters or articles or
               certificates of incorporation, bylaws and rules and regulations
               related thereto, whether now or hereafter existing (collectively,
               "Project Documents");

        provided, however, that in the event that (A) the Receivables Borrowing
        Term shall expire or the Loan shall reach the Maximum Loan Amount, and
        (B) Lender shall not agree to extend the Receivables Borrowing Term or
        increase the Maximum Loan Amount, as applicable, for such period or for
        such amount as Borrower shall request, upon terms and conditions
        substantially similar to those provided in this Agreement, and (C)
        Borrower and another lender shall enter into financing arrangements
        which provide for such additional borrowing term or loan amount and
        pursuant to which Borrower, the Trustee, the Trusts or any of them
        grants a Security Interest in, or otherwise assigns, their respective
        right, title and interest in and to any of the Trusts in which Lender
        has a Security Interest, Lender agrees to enter into such intercreditor
        agreements, in form and substance reasonably satisfactory to Lender, as
        shall be necessary to share with such other lender, on a pari passu
        basis, Lender's Security Interest in the right, title and interest of
        Borrower, the Trustee or any of the Trusts, as applicable, in and to
        such Trusts and to consent to a senior assignment to such lender of any
        receivables collateral, other than any of the Receivables Collateral,
        with respect to any Project. Except as expressly provided in this
        Agreement, or in any other Document, Lender's Security Interest in the
        Collateral described in this paragraph or any other collateral given
        pursuant to or in connection with this Agreement shall be absolute,
        continuing and applicable to all existing and future Advances and shall
        secure the repayment of the Loan and the Performance of all Obligations
        throughout the Term of the Loan.

               3.2 At or prior to the time each Advance under the Receivables
Loan is made hereunder, Borrower shall have delivered, or caused to have been
delivered, to Lender (a) an executed Assignment of the Eligible Receivables that
enter into the Borrowing Base calculation against which the Advance is to be
made; (b) the original Purchaser Notes or Contracts executed by the Purchaser;
(c) the recorded Purchaser Mortgage; and (d) the Title Policy insuring the
Purchaser Mortgage as a first lien upon the Lot or Unit acquired by the Person
executing the Purchaser Note; provided, however, that the delivery of items (b),
(c) and (d) may be made only once during any calendar month.

               3.3 Each Purchaser Note shall be duly endorsed "Pay to the order
of FINOVA Capital Corporation".


                                      -32-
<PAGE>   33


               3.4 (a) During the Receivables Borrowing Term, if an Eligible
        Receivable which comprises a part of the Receivables Collateral shall
        cease to qualify as, or is otherwise determined not to be an Eligible
        Receivable, and without such Eligible Receivable the principal amount of
        the Receivables Loan shall exceed the Borrowing Base, Borrower shall,
        within thirty (30) days thereafter, pay the Lender an amount equal to
        that portion of the Receivables Loan, together with interest, costs, and
        expenses, if any, attributable to such ineligible Receivables Collateral
        or shall replace such ineligible Receivables Collateral with other
        Eligible Receivables which have value equal to or greater than that
        attributable to the ineligible Receivables Collateral being replaced.

                   (b) Following the Receivables Borrowing Term, if an Eligible
        Receivable which comprises a part of the Receivables Collateral shall
        cease to qualify as, or is otherwise determined not to be an Eligible
        Receivable, and without such Eligible Receivable the principal amount of
        the Receivables Loan shall exceed the Borrowing Base, Borrower shall,
        within thirty (30) days thereafter, pay to Lender an amount equal to
        that portion of the Receivables Loan, together with interest, costs, and
        expenses, if any, attributable to such ineligible Receivables Collateral
        or shall replace such ineligible Receivables Collateral with other
        Eligible Receivables which have value equal to or greater than that
        attributable to the ineligible Receivables Collateral being replaced.

               3.5 Concurrently with the delivery of the replacement Eligible
Receivables to Lender, Borrower will deliver to Lender all of the items which
Borrower is required to deliver to Lender pursuant to PARAGRAPH 5.2.1 hereof,
together with a Borrower's certificate in form and substance identical to
EXHIBIT "3.5" attached hereto.

               3.6 Upon substitution of the Eligible Receivables for the
ineligible Receivables Collateral, or payment of an amount equal to that portion
of the Loan, together with interest, costs, and expenses, if any, attributable
to such ineligible Receivables Collateral, in accordance with PARAGRAPH 3.4
hereof, Lender shall release, reassign and/or endorse, as applicable, to
Borrower, without recourse or warranty of any kind (other than that Lender has
not made any prior assignment of, and has not created any rights of third
parties with respect to, such ineligible Receivables Collateral), the replaced
ineligible Receivables Collateral and all Purchaser Mortgages securing such
replaced Receivables Collateral, and terminate its Security Interest therein and
in the Lots or Units which are the subject thereof, provided that no Event of
Default, and no act or event which after the giving of notice or the lapse of
time, or both, would constitute an Event of Default, has occurred and is
continuing. The release, reassignment and/or endorsement instrument shall be
prepared by Borrower and submitted to Lender unless Lender otherwise specifies
in its sole discretion. Said instrument must be in form and substance reasonably
satisfactory to Lender.


                                      -33-

<PAGE>   34

               Upon Borrower's written request, Lender agrees to release those
Contracts and Instruments, and any and all property rights incidental thereto,
which Borrower demonstrates to the reasonable satisfaction of Lender:

                   (a) have been paid in full by the obligor(s) thereunder; or

                   (b) provided no Event of Default, and no act or event which
        after the giving of notice or the lapse of time, or both, would
        constitute an Event of Default, has occurred and is continuing, have
        been replaced with Eligible Receivables which have an aggregate value
        equal to or greater than that attributable to the Receivables Collateral
        being released; or

                   (c) during the Receivables Borrowing Term, provided no Event
        of Default, and no act or event which after the giving of notice or the
        lapse of time, or both, would constitute an Event of Default, has
        occurred and is continuing, following the release of such Receivables
        Collateral, the principal amount of the Receivables Loan outstanding
        hereunder shall not be in excess of the Borrowing Base; or

                   (d) following the Receivables Borrowing Term, provided no
        Event of Default, and no act or event which after the giving of notice
        or the lapse of time, or both, would constitute an Event of Default, has
        occurred and is continuing, following the release of such Eligible
        Receivables, the principal amount outstanding under the Receivables Loan
        shall not be in excess of the Borrowing Base.

               3.7 Provided that there is no Event of Default, and no act or
event which after the giving of notice or the lapse of time, or both, would
constitute an Event of Default, has occurred and is continuing, under any other
agreement between Borrower and Lender, Lender shall release, reassign and/or
endorse, as applicable, all of the Receivables Collateral and all Purchaser
Mortgages securing the Receivables Collateral, and terminate its Security
Interest therein and in the Lots or Units which are the subject thereof, upon
the payment, in full, of all of Borrower's indebtedness to Lender arising under
this Agreement. Any release, reassignment and/or endorsement made pursuant to
this PARAGRAPH 3.7 shall be made without recourse or warranty of any kind (other
than the warranties contemplated by PARAGRAPH 3.6 of this Agreement).

               3.8 Notwithstanding anything contained herein to the contrary,
Lender agrees that it will not disturb the rights of any Purchaser; provided,
however, that nothing herein is intended or shall be construed to abrogate or
restrict any rights or remedies against a Purchaser or with respect to a
Purchaser's Contract in the event that a Purchaser is in default under such
Contract.


                                      -34-
<PAGE>   35


               3.9 As additional security for Borrower's Performance of all
Obligations owed to Lender under the Documents, Borrower has caused to be
executed and recorded for the benefit of Lender the Aloha Bay Mortgage, subject
to the limitations contained therein. At such time as all principal, interest
and other sums payable under the Aloha Bay Note have been paid in full, Lender
shall, upon the request of Borrower, release and terminate the Aloha Bay
Mortgage and any accompanying UCC Financing Statements and related Security
Interests, provided that there does not then exist an Event of Default or any
act or event which with notice or passage of time, or both, would constitute an
Event of Default. All instruments effecting such release and termination shall
be prepared by Borrower and submitted to Lender unless Lender otherwise
specifies in its sole discretion. Such instruments shall be in form and
substance reasonably satisfactory to Lender. Lender also hereby agrees that it
will release from the effect of the Security Interest granted herein and in the
Aloha Bay Mortgage, and from the effect of any UCC Financing Statements, Units
in Aloha Bay which are sold by Borrower to Purchasers upon (a) the payment to
Lender of a release fee (the "Aloha Bay Release Fee") equal to $2,900.00 per
Unit, (b) the payment of an incentive fee (as provided in PARAGRAPH 7.15 below)
in the amount of $20.00 per Unit until such time as Borrower has repaid the
Aloha Bay Note in full, and thereafter in the amount of $2,900.00 per Unit until
such time as Borrower has paid to Lender a total incentive fee as to Aloha Bay
of $32,640.00, all as provided in PARAGRAPH 7.15 below, and (c) the satisfaction
of the Release Conditions. Upon the release of a Unit from the Aloha Bay
Mortgage, such release shall also constitute a release from the lien of the
Aloha Bay Mortgage, and from the lien of Lender's Security Interest, of any
Purchaser Notes or Purchaser Mortgages subsequently arising from the sale of
such Unit; provided, however, that, notwithstanding the foregoing, such
Purchaser Notes and Purchaser Mortgages shall continue to be subject to Lender's
Security Interest to the extent that such Purchaser Notes or Purchaser Mortgages
constitute Receivables Collateral. Payments of interest due under the Aloha Bay
Note shall not be credited against any Aloha Bay Release Fees.

               3.10 As additional security for Borrower's Performance of all
Obligations owed to Lender under the Documents, Borrower has caused to be
executed and recorded for the benefit of Lender the Headquarters Deed of Trust.
At such time as the outstanding principal balance of the Office Note has been
reduced, either through ordinary payments of principal as required under the
Office Note or through prepayments of principal, to $4,273,778.74, or less,
Lender shall, upon the request of Borrower, release and terminate the
Headquarters Deed of Trust and any accompanying UCC Financing Statements and
related Security Interests, provided that there does not then exist an Event of
Default or any act or event which with notice or passage of time, or both, would
constitute an Event of Default, and provided, further, that Borrower has
satisfied all other conditions precedent to such release as set forth in the
Headquarters Deed of Trust. All instruments effecting such release and
termination shall be prepared by Borrower and submitted to Lender unless Lender
otherwise specifies in its sole discretion. Such instruments shall be in form
and substance reasonably satisfactory to Lender.


                                      -35-

<PAGE>   36

               3.11 As additional security for Borrower's Performance of all
Obligations owed to Lender under the Documents, Borrower has caused to be
executed and recorded for the benefit of Lender the FCFC Deed of Trust. At such
time as the outstanding principal balance of the Office Note has been reduced,
either through ordinary payments of principal as required under the Office Note
or through prepayments of principal, to $2,273,778.74, or LESS, Lender shall,
upon the request of Borrower, release and terminate the FCFC Deed of Trust and
any accompanying UCC Financing Statements and related Security Interests,
provided that there does not then exist an Event of Default or any act or event
which with notice or passage of time, or both, would constitute an Event of
Default, and provided, further, that Borrower has satisfied all other conditions
precedent with respect to such release as set forth in the FCFC Deed of Trust.
All instruments effecting such release and termination shall be prepared by
Borrower and submitted to Lender unless Lender otherwise specifies in its sole
discretion. Such instruments shall be in form and substance reasonably
satisfactory to Lender.

               3.12 As additional security for Borrower's Performance of all
Obligations owed to Lender under the Documents, Borrower has caused to be
executed and recorded for the benefit of Lender the Ida Building One Deed of
Trust. At such time as all principal, interest and other sums payable under the
Ida Building One Note have been paid in full, Lender shall, upon the request of
Borrower, release and terminate the Ida Building One Deed of Trust and any
accompanying UCC Financing Statements and related Security Interests, provided
that there does not then exist an Event of Default or any act or event which
with notice or passage of time, or both, would constitute an Event of Default.
All instruments effecting such release and termination shall be prepared by
Borrower and submitted to Lender unless Lender otherwise specifies in its sole
discretion. Such instruments shall be in form and substance reasonably
satisfactory to Lender. Lender also hereby agrees that it will release from the
effect of the Security Interest granted herein, and in the Ida Building One Deed
of Trust and from the effect of any accompanying UCC Financing Statements, Units
in Ida Building One which are sold by Borrower to Purchasers upon (a) the
payment to Lender of a release fee (the "Ida Building One Release Fee") equal to
$1,650.00 per Unit, (b) the payment of the Ida Building One Incentive Fee (as
provided in PARAGRAPH 7.13 below) in the amount of $20.00 per Unit until such
time as Borrower has repaid the Ida Building One Note in full, and thereafter in
the amount of $1,650.00 per Unit until such time as Borrower has paid to Lender
a total Ida Building One Incentive Fee as to Ida Building One of $48,960.00, all
as provided in PARAGRAPH 7.13 below, (c) if applicable, the payment to Lender of
the Towers Note Principal Reduction Fee, and (d) the satisfaction of the Release
Conditions. Upon the release of a Unit from the Ida Building One Deed of Trust,
such release shall also constitute a release from the lien of the Ida Building
One Deed of Trust, and from the lien of Lender's Security Interest, of any
Purchaser Notes or Purchaser Mortgages subsequently arising from the sale of
such Unit; provided, however, that, notwithstanding the foregoing, such
Purchaser Notes and Purchaser Mortgages shall continue to be subject to Lender's
Security Interest to the extent that such Purchaser Notes or Purchaser Mortgages
constitute


                                      -36-

<PAGE>   37

Receivables Collateral. Payments of interest due under the Ida Building One Note
shall not be credited against any Ida Building One Release Fees.

               3.13 As additional security for Borrower's Performance of all
Obligations owed to Lender under the Documents, Borrower has caused to be
executed and recorded for the benefit of Lender the Ida Building Two Deed of
Trust. At such time as all principal, interest and other sums payable under the
Ida Building Two Note have been paid in full, Lender shall, upon the request of
Borrower, release and terminate the Ida Building Two Deed of Trust and any
accompanying UCC Financing Statements and related Security Interests, provided
that there does not then exist an Event of Default or any act or event which
with notice or passage of time, or both, would constitute an Event of Default.
All instruments effecting such release and termination shall be prepared by
Borrower and submitted to Lender unless Lender otherwise specifies in its sole
discretion. Such instruments shall be in form and substance reasonably
satisfactory to Lender. Lender also hereby agrees that it will release from the
effect of the Security Interests granted herein and in the Ida Building Two Deed
of Trust, and from the effect of any accompanying UCC Financing Statements,
Units in Ida Building Two which are sold by Borrower to Purchasers upon (a) the
payment to Lender of a release fee (the "Ida Building Two Release Fee") equal to
$2,550.00 per Unit, (b) the payment of the Ida Building Two Incentive Fee (as
provided in PARAGRAPH 7.14 hereof) in the amount of $20.00 per Unit until such
time as Borrower has repaid the Ida Building Two Note in full, and thereafter in
the amount of $2,550.00 per Unit until such time as Borrower has paid to Lender
a total Ida Building Two Incentive Fee as to Ida Building Two of $18,360.00, all
as provided in PARAGRAPH 7.14 hereof, (c) if applicable, the payment to Lender
of the Towers Note Principal Reduction Fee, and (d) the satisfaction of the
Release Conditions. Upon the release of a Unit from the Ida Building Two Deed of
Trust, such release shall also constitute a release from the lien of the Ida
Building Two Deed of Trust, and from the lien of Lender's Security Interest, of
any Purchaser Notes or Purchaser Mortgages subsequently arising from the sale of
such Unit; provided, however, that, notwithstanding the foregoing, such
Purchaser Notes and Purchaser Mortgages shall continue to be subject to Lender's
Security Interest to the extent that such Purchaser Notes or Purchaser Mortgages
constitute Receivables Collateral. Payments of interest due under the Ida
Building Two Note shall not be credited against any Ida Building Two Release
Fees.

               3.14 As additional security for Borrower's Performance of all
Obligations owed to Lender under the Documents, Borrower has caused to be
executed and recorded for the benefit of Lender the Ida Building Addition Deed
of Trust. At such time as all principal, interest and other sums payable under
the Ida Building Addition Note have been paid in full, Lender shall, upon the
request of Borrower, release and terminate the Ida Building Addition Deed of
Trust and any accompanying UCC Financing Statements and related Security
Interests provided that there does not then exist an Event of Default or any act
or event which with notice or passage of time, or both, would constitute an
Event of Default. All instruments effecting such release and termination shall
be prepared by Borrower and submitted to Lender unless Lender otherwise
specifies in its sole discretion. Such 


                                      -37-

<PAGE>   38

instruments shall be in form and substance reasonably satisfactory to Lender.
Lender also hereby agrees that it will release from the effect of the Security
Interests granted herein and in the Ida Building Addition Deed of Trust, and
from the effect of any accompanying UCC Financing Statements, Units in the Ida
Building Addition which are sold by Borrower to Purchasers upon (a) the payment
to Lender of a release fee (the "Ida Building Addition Release Fee") equal to
$1,650.00 per Unit, (b) the payment of the Ida Building Addition Incentive Fee
(as provided in PARAGRAPH 7.16 below) in the amount of $20.00 per Unit until
such time as Borrower has repaid the Ida Building Addition Note in full, and
thereafter in the amount of $1,650.00 per Unit until such time as Borrower has
paid to Lender a total Ida Building Addition Incentive Fee as to Ida Building
Addition of $24,480.00, all as provided in PARAGRAPH 7.16 below, (c) if
applicable, the payment to Lender of the Towers Note Principal Reduction Fee,
and (d) the satisfaction of the Release Conditions. Upon the release of a Unit
from the Ida Building Addition Deed of Trust, such release shall also constitute
a release from the lien of the Ida Building Addition Deed of Trust, and from the
lien of Lender's Security Interest, of any Purchaser Notes or Purchaser
Mortgages subsequently arising from the sale of such Unit; provided, however,
that, notwithstanding the foregoing, such Purchaser Notes and Purchaser
Mortgages shall continue to be subject to Lender's Security Interest to the
extent that such Purchaser Notes or Purchaser Mortgages constitute Receivables
Collateral. Payments of interest due under the Ida Building Addition Note shall
not be credited against any Ida Building Addition Release Fees.

               3.15 As additional security for Borrower's Performance of all
Obligations owed to Lender under the Documents, Borrower has caused to be
executed and recorded for the benefit of Lender the Winnick Building Addition
Deed of Trust. At such time as all principal, interest and other sums payable
under the Winnick Building Addition Note have been paid in full, Lender shall,
upon the request of Borrower, release and terminate the Winnick Building
Addition Deed of Trust and any accompanying UCC Financing Statements and related
Security Interests provided that there does not then exist an Event of Default
or any act or event which with notice or passage of time, or both, would
constitute an Event of Default. All instruments effecting such release and
termination shall be prepared by Borrower and submitted to Lender unless Lender
otherwise specifies in its sole discretion. Such instruments shall be in form
and substance reasonably satisfactory to Lender. Lender also hereby agrees that
it will release from the effect of the Security Interests granted herein and in
the Winnick Building Addition Deed of Trust, and from the effect of any UCC
Financing Statements, Units in the Winnick Building Addition which are sold by
Borrower to Purchasers upon (a) the payment to Lender of a release fee (the
"Winnick Building Addition Release Fee") equal to $2,500.00 per Unit, (b) the
payment of the Winnick Building Addition Incentive Fee (as provided in PARAGRAPH
7.17 below) in the amount of $20.00 per Unit until such time as Borrower has
repaid the Winnick Building Addition Note in full, and thereafter in the amount
of $2,500.00 per Unit until such time as Borrower has paid to Lender a total
Winnick Building Addition Incentive Fee as to Winnick Building Addition of
$22,440.00, all as provided in PARAGRAPH 7.17 below, (c) if applicable, the
payment to Lender of the Towers Note Principal Reduction Fee, and (d) the
satisfaction of the Release Conditions. Upon the 


                                      -38-

<PAGE>   39

release of a Unit from the Winnick Building Addition Deed of Trust, such release
shall also constitute a release from the lien of the Winnick Building Addition
Deed of Trust, and from the lien of Lender's Security Interest, of any Purchaser
Notes or Purchaser Mortgages subsequently arising from the sale of such Unit;
provided, however, that, notwithstanding the foregoing, such Purchaser Notes and
Purchaser Mortgages shall continue to be subject to Lender's Security Interest
to the extent that such Purchaser Notes or Purchaser Mortgages constitute
Receivables Collateral. Payments of interest due under the Winnick Building
Addition Note shall not be credited against any Winnick Building Addition
Release Fees.

               3.16 As additional security for Borrower's Performance of all
Obligations owed to Lender under the Documents, Borrower has caused to be
executed and recorded for the benefit of Lender, or will cause to be recorded as
soon as possible after the Closing Date, the Second Winnick Building Addition
Deed of Trust. At such time as all principal, interest and other sums payable
under the Second Winnick Building Addition Note have been paid in full, Lender
shall, upon the request of Borrower, release and terminate the Second Winnick
Building Addition Deed of Trust and any accompanying UCC Financing Statements
and related Security Interests provided that there does not then exist an Event
of Default or any act or event which with notice or passage of time, or both,
would constitute an Event of Default. All instruments effecting such release and
termination shall be prepared by Borrower and submitted to Lender unless Lender
otherwise specifies in its sole discretion. Such instruments shall be in form
and substance reasonably satisfactory to Lender. Lender also hereby agrees that
it will release from the effect of the Security Interests granted herein and in
the Second Winnick Building Addition Deed of Trust, and from the effect of any
accompanying UCC Financing Statements, Units in the Second Winnick Building
Addition which are sold by Borrower to Purchasers upon (a) the payment to Lender
of a release fee (the "Second Winnick Building Addition Release Fee") equal to
$2,645.00 per Unit, (b) the payment of the Second Winnick Building Addition
Incentive Fee (as provided in PARAGRAPH 7.18 below) in the amount of $20.00 per
Unit until such time as Borrower has repaid the Second Winnick Building Addition
Note in full, and thereafter in the amount of $2,645.00 per Unit until such time
as Borrower has paid to Lender a total Second Winnick Building Addition
Incentive Fee as to Second Winnick Building Addition of $18,360.00, all as
provided in PARAGRAPH 7.18 below, (c) if applicable, the payment to Lender of
the Towers Note Principal Reduction Fee, and (d) the satisfaction of the Release
Conditions. Upon the release of a Unit from the Second Winnick Building Addition
Deed of Trust, such release shall also constitute a release from the lien of the
Second Winnick Building Addition Deed of Trust, and from the lien of Lender's
Security Interest, of any Purchaser Notes or Purchaser Mortgages subsequently
arising from the sale of such Unit; provided, however, that, notwithstanding the
foregoing, such Purchaser Notes and Purchaser Mortgages shall continue to be
subject to Lender's Security Interest to the extent that such Purchaser Notes or
Purchaser Mortgages constitute Receivables Collateral. Payments of interest due
under the Second Winnick Building Addition Note shall not be credited against
any Second Winnick Building Addition Release Fees.


                                      -39-

<PAGE>   40

               3.17 As additional security for Borrower's Performance of all
Obligations owed to Lender under the Documents, Borrower will cause to be
executed and recorded for the benefit of Lender a Mortgage with respect to each
Additional Project under which Advances of the Mortgage Loan Facility are made
by Lender to Borrower. At such time as all principal, interest and other sums
payable under a Project Note have been paid in full, Lender shall, upon the
request of Borrower, release and terminate the Mortgage recorded with respect to
such Project and any accompanying UCC Financing Statements and related Security
Interests, provided that there does not then exist an Event of Default or any
act or event which with notice or passage of time, or both, would constitute an
Event of Default. All instruments effecting such release and termination shall
be prepared by Borrower and submitted to Lender unless Lender otherwise
specifies in its sole discretion. Such instruments shall be in form and
substance reasonably satisfactory to Lender. Lender also hereby agrees that it
will release from the effect of the Security Interests granted herein, and from
the effect of any such Mortgage or accompanying UCC Financing Statements filed
and recorded with respect thereto, Units in the Project which are sold by
Borrower to Purchasers upon (a) the payment to Lender of a release fee (the
"Project Release Fee") equal to a specific amount per Unit which is agreed to by
Lender and Borrower at the time of the initial Advance under the Mortgage Loan
Facility with respect to such Project, (b) the payment of the Project Incentive
Fee (as provided in PARAGRAPH 7.19 below) in an amount equal to $20.00 per Unit
in such Project until such time as Borrower has repaid the respective Project
Note in full, and thereafter in the amount of the Project Release Fee per Unit
until such time as the Borrower has paid to Lender a total Project Incentive Fee
as to the Project equal in amount to $20.00 multiplied by the number of Units in
such Project, and (c) the satisfaction of the Release Conditions. Upon the
release of a Unit from the Mortgage recorded with respect to such Project, such
release shall also constitute a release from the lien of such Mortgage, and from
the lien of Lender's Security Interest, of any Purchaser Notes or Purchaser
Mortgages subsequently arising from the sale of such Unit; provided, however,
that, notwithstanding the foregoing, such Purchaser Notes and Purchaser
Mortgages shall continue to be subject to Lender's Security Interest to the
extent that such Purchaser Notes or Purchaser Mortgages constitute Receivables
Collateral. The Project Release Fee applicable to each Project with respect to
which Advances under the Mortgage Loan Facility are made shall be set forth in
the Mortgage to be recorded with respect to such Project. Payments of interest
due under the Project Note shall not be credited against any Project Release
Fees.

               3.18 No release of a Unit or release or satisfaction of any
Mortgage provided by Borrower as additional security for the Loan shall impair
or affect Lender's remaining Security Interests or any term or provision of this
Agreement.


                                      -40-
<PAGE>   41


                                   ARTICLE IV

                               ADDITIONAL SECURITY

               4.1 As additional security for Borrower's Performance of all
Obligations owed to Lender under the Documents, Borrower has caused the
Guarantee to be executed and delivered to Lender.

                                    ARTICLE V

                                    ADVANCES

               5.1 Lender shall have no obligation to make any Advance hereunder
until such time as all of the conditions precedent set forth in the following
paragraphs and elsewhere in this Agreement have been satisfied, at Borrower's
sole expense, as determined by Lender in its sole discretion.

               5.2 Borrower shall have delivered to Lender the following in form
and substance satisfactory to Lender, and when required, in recordable form:

                   5.2.1 RECEIVABLES ADVANCES. With respect to Advances of the
        Receivables Loan, Borrower shall have delivered, or caused to be
        delivered, to Lender the following:

                         (a) At least five (5) business days prior to the date
               of such Advance, copies of the Eligible Receivables against which
               such Advance is to be made, including, without limitation,
               Contracts, Purchaser Notes, Purchaser Mortgages, Title Policies
               insuring such Purchaser Mortgages, and, upon the request of
               Lender, all other documents and exhibits, including, without
               limitation, any advertising materials, which have been or are
               being used by Borrower in connection with the Project or the sale
               of Eligible Receivables therein;

                         (b) The items described in EXHIBIT "5.2.1" attached
               hereto; and

                         (c) Such other items as Lender requests which are
               reasonably necessary to evaluate the request for the Advance and
               the satisfaction of the conditions precedent thereto.

                   5.2.2 ADVANCES UNDER MORTGAGE LOAN FACILITY. With respect to
        Advances under the Mortgage Loan Facility, Borrower shall have
        delivered, or caused to be delivered, to Lender the following:


                                      -41-

<PAGE>   42

                   (a) The items described in EXHIBIT "5.2.2" attached hereto;

                   (b) The Mortgage Loan Fee payable with respect to the
        Advance; and

                   (c) Such other items as Lender requests which are reasonably
        necessary to evaluate the request for the Advance under the Mortgage
        Loan Facility and the satisfaction of the conditions precedent thereto.

               5.3 No material adverse change shall have occurred in any portion
of the Project or in Borrower's or Guarantor's business or financial condition
since the date of the latest financial and operating statements given to Lender
by or on behalf of Borrower or Guarantor, except as previously disclosed to and
permitted, in writing, by Lender.

               5.4 There shall have been no materially adverse changes in the
warranties and representations made by Borrower and/or Guarantor in the
Documents, except as previously disclosed to and permitted, in writing, by
Lender.

               5.5 Neither an Event of Default nor an act or event which after
notice and/or lapse of time or both would constitute an Event of Default shall
have occurred and be continuing.

               5.6 The interest rate applicable to the Advance (before giving
effect to any savings clause) will not exceed the maximum contract rate
permitted by the Applicable Usury Law.

               5.7 All indebtedness (subject to PARAGRAPH 8.24 hereof, other
than indebtedness for reasonable salaries in the normal course of business) owed
by Borrower to any shareholder or affiliate of Borrower shall be, upon the
occurrence and continuation of an Event of Default, subordinated to indebtedness
owed by Borrower to Lender in a form satisfactory to Lender.

               5.8 Advances shall be requested in writing on Lender's standard
"Request for Advance and Certification" form by Borrower by those officers or
agents of Borrower named in authorizing resolutions of Borrower from time to
time delivered to Lender and which are in form and substance satisfactory to
Lender.

               5.9 Advances may be disbursed by checks or drafts payable to
Borrower; after Borrower's written request, by wire transfer to Borrower's
account, as designated in writing by Borrower from time to time; or, at the
option of Lender after Borrower's written 


                                      -42-

<PAGE>   43

request, to others, either severally or jointly with Borrower, for the credit or
benefit of Borrower.

               5.10 Lender shall have no obligation to make any Advance unless
at least two of the following Persons, or, in the event of the death,
incapacity, retirement, or requested disassociation for just cause of any of
such Persons, any substitute therefor reasonably satisfactory to Lender, shall
remain engaged in the active management of Borrower on a nonexclusive
nonfull-time basis and shall perform duties substantially similar to those
presently performed by such Persons in their present executive offices: Mr.
Jerome J. Cohen, Mr. Herbert B. Hirsch and Mr. Don A. Mayerson.

               5.11 Although Lender shall have no obligation to make an Advance
unless and until all of the conditions thereto set forth herein have been
satisfied, Lender may, at its sole discretion, make Advances prior to that time
without waiving or releasing any of the Obligations, but Borrower shall continue
to be required to strictly perform all such Obligations.

               5.12 Lender shall have no obligation to make any Advance against
any Eligible Receivables arising from any Additional Project or the sale of any
Units or Lots therein until:

                   (a) Borrower shall have delivered to Lender the following
        loan documents duly executed in form and substance satisfactory to
        Lender, and when required such loan documents shall be in recordable
        form:

                       (i) A favorable opinion from counsel to the Borrower, in
               form and substance satisfactory to Lender, as to such matters as
               Lender may reasonably require; and

                       (ii) A certificate from the President, a Vice President
               or the Treasurer of Borrower, in form satisfactory to Lender, as
               to such matters as Lender may reasonably require.

                      (b) Borrower shall have delivered, or caused to be
        delivered, to Lender the following additional items:

                       (i) Maps or surveys of the Additional Project certified
               by a licensed engineer or surveyor, acceptable to Lender, showing
               the dimensions of the Additional Project, together with a
               certificate from the President, a Vice President or the Treasurer
               of Borrower, satisfactory to Lender, that the Additional Project
               complies with all applicable laws, rules, regulations, and public
               and private restrictions affecting the use of the Additional
               Project;


                                      -43-

<PAGE>   44

                       (ii) Evidence that the Additional Project is not located
               within a special flood hazard area or evidence, satisfactory to
               Lender, that the Additional Project is insured, upon such terms
               and in such amounts as shall be satisfactory to Lender, against
               risks or physical damage caused by flooding;

                       (iii) Copies of any trust agreement relating to the
               Additional Project, which shall be in form and substance
               satisfactory to Lender;

                       (iv) An Environmental Certificate with Representations,
               Covenants and Warranties, with respect to the Additional Project
               in form and substance acceptable to Lender.

                      (c) Lender shall have made a site inspection of the
        Additional Project and the Additional Project shall not have been
        determined by Lender to be unsatisfactory.

                      (d) All sales and promotional documents and project
        documents relating to the Additional Project and the related Receivables
        Collateral shall have been submitted to Lender and shall not have been
        determined by Lender to be unsatisfactory.

                      (e) Lender shall have given Borrower written notice
        confirming the satisfaction of the conditions set forth in SUBPARAGRAPHS
        (c) AND (d) of this PARAGRAPH 5.12.

               5.13 If Lender is requested to accept an assignment from Borrower
of any Receivables Collateral arising from the sale of one or more Units or Lots
in an Additional Project and the Receivables Collateral was originated as a
result of any sales by an Additional Project Developer other than Borrower,
then:

                       (a) All covenants, conditions, restrictions and other
               terms of this Agreement which refer to the Borrower, other than
               provisions providing for or requiring payment of money to Lender,
               shall be deemed to include reference to the Additional Project
               Developer to the extent such covenants, conditions, restrictions
               and other terms concern or relate to the sale of the Units or
               Lots which generated such Receivables Collateral, the performance
               of obligations of the seller to Purchasers of such Units or Lots
               and/or the preservation, protection, collection, verification
               and/or value of such Receivables Collateral;

                       (b) Borrower shall cause the Additional Project Developer
               which originated the Receivables Collateral to perform, observe
               and comply with all covenants, conditions, restrictions and other
               terms of this Agreement which concern or relate to such
               Receivables Collateral and/or the Additional Project in question;
               and


                                      -44-

<PAGE>   45

                       (c) Borrower shall, upon written request of Lender and as
               may be deemed necessary or desirable by Lender on a case-by-case
               basis, cause the Additional Project Developer to make and enter
               into any direct undertakings with Lender that Lender may deem
               necessary or appropriate to assure the preservation, protection,
               collection, verification and/or value of such Receivables
               Collateral.

None of the provisions of this PARAGRAPH 5.13 or any direct undertaking to
Lender contemplated by subparagraph (c) above is intended or shall be construed
to modify, waive, release or otherwise abrogate any provision of this Agreement
or of the other Documents which imposes any obligation or liability on Borrower.

                                   ARTICLE VI

                                HAZARDOUS WASTES

               6.1 Neither the Borrower nor, to the best knowledge of the
Borrower, any other Person has ever caused or permitted any Hazardous Material
to be placed, held, located or disposed of on, under or at any Project or any
part thereof or from any Project in violation of law into the atmosphere or any
watercourse, body of water, or wetlands or any other real property legally or
beneficially owned (or any interest or estate in which is owned) by the Borrower
(including, without limitation, any property owned by a land trust the
beneficial interest in which is owned, in whole or in part, by the Borrower),
and neither any Project, any part thereof, nor any other real property legally
or beneficially owned (or any interest or estate in which is owned) by the
Borrower (including, without limitation, any property owned by a land trust the
beneficial interest in which is owned, in whole or in part, by the Borrower) has
ever been used (whether by the Borrower or, to the best knowledge of the
Borrower, by any other Person) as a treatment, storage or disposal (whether
permanent or temporary) site for any Hazardous Material. For purposes of this
Agreement, "Hazardous Material" means and includes any hazardous substance or
any pollutant or contaminant defined as such in (or for purposes of) the
Comprehensive Environmental Response, Compensation, and Liability Act, any
so-called "Superfund" or "Superlien" law, the Toxic Substances Control Act, or
any other Federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree, regulating, relating to, or imposing liability or
standards of conduct concerning, any hazardous, toxic or dangerous waste,
substance or material, as now or at any time hereafter in effect, asbestos or
any substance or compound containing asbestos, or any other hazardous, toxic or
dangerous, waste, substance or material.

               6.2 Borrower will not place, hold, locate or dispose of on, under
or at the Project or any part thereof or from the Project into the atmosphere or
any watercourse, body of water or wetlands or any other real property legally or
beneficially owned (or any interest or estate in which is owned) by the Borrower
(including, without limitation, any property owned by a land trust the
beneficial interest in which is owned, in whole or in part, by the 


                                      -45-
<PAGE>   46


Borrower) any Hazardous Material in violation of law, nor will Borrower permit
or cause any other Person to do any of the aforesaid.

               6.3 Borrower hereby indemnifies the Lender and agrees to hold the
Lender harmless from and against any and all losses, liabilities, damages,
injuries, costs, expenses and claims or any and every kind whatsoever, including
reasonable attorneys' fees, paid, incurred or suffered by, or asserted against,
the Lender for, with respect to, or as a direct or indirect result of, the
presence on or under, or the escape, seepage, leakage, spillage, discharge,
emission, discharging or release from, any Project or from any Project into or
upon the land, the atmosphere, or any watercourse, body of water or wetland of
any Hazardous Material (including, without limitation, any losses, liabilities,
damages, injuries, costs, expenses or claims asserted or arising under the
Comprehensive Environmental Response, Compensation and Liability Act, any
so-called "Superfund" or "Superlien" law, or any other Federal, state or local
statute, law, ordinance, code, rule, regulation, order or decree regulating,
relating to or imposing liability or standards of conduct concerning any
Hazardous Material).

                                   ARTICLE VII

                      NOTES: MAINTENANCE OF BORROWING BASE;
                       PAYMENTS; SERVICING AND COLLECTION

               7.1 The Receivables Loan shall be evidenced by the Receivables
Note and shall be repaid in immediately available funds according to the terms
thereof and such provisions of this Agreement as are applicable. Advances made
under the Mortgage Loan Facility with respect to any Additional Project shall be
evidenced by a separate Project Note in a form acceptable to Lender, executed
and delivered simultaneously with the initial Advance under the Mortgage Loan
Facility with respect to an approved Additional Project and payable to Lender
upon the terms and conditions contained therein and in this Agreement, as
applicable. The Advances made under the Mortgage Loan Facility with respect to
Ida Building One, Ida Building Two, Ida Building Addition, Winnick Building
Addition, Towers and the Second Winnick Building Addition shall continue to be
evidenced by the Ida Building One Note, the Ida Building Two Note, the Ida
Building Addition Note, the Winnick Building Addition Note, the Towers Note and
the Second Winnick Building Addition Note, respectively. The Obligations of
Borrower to Lender under the Aloha Bay Note shall continue to be evidenced and
governed by the Aloha Bay Note, and the Obligations of Borrower under the Office
Note shall continue to be evidenced and governed by the Office Note.

               7.2 If at any time the aggregate outstanding principal amount of
the Receivables Loan shall exceed the Borrowing Base, for any reason whatsoever
(including, without limitation, the termination or modification of an existing
Contract or Instrument with respect to a certain Lot or Unit, and the
simultaneous entering into of a new or revised 


                                      -46-

<PAGE>   47

Contract or Instrument for the purchase of a less expensive Lot or Unit),
Borrower shall immediately notify Lender of such fact and make a mandatory
prepayment, without premium or penalty, in the amount necessary (including
accrued interest) to reduce the outstanding principal amount of the Receivables
Loan to the existing Borrowing Base. If a mandatory prepayment is required,
Borrower shall have the right, in lieu of payment to eliminate all, or any part,
of the excess borrowing and thereby avoid the obligation to make a mandatory
prepayment by (a) promptly notifying Lender in writing of Debtor's intention to
assign new Eligible Receivables so as to increase the Borrowing Base to the
required amount and (b) promptly effecting the assignment of the new Eligible
Receivables, but in no event later than five (5) business days after the
Borrowing Base deficiency occurred. Such assignment shall be made in compliance
with the conditions precedent stated in ARTICLE V hereof. Any mandatory
prepayments to be made by Debtor pursuant to this PARAGRAPH 7.2 will not affect
any other Obligation of Borrower arising under the other provisions of this
Agreement or the Receivables Note.

               7.3 Provided (a) Borrower pays all sums then due and payable to
Lender in connection with the Loan, and (b) Borrower has given Lender at least
thirty (30) days prior written notice of the prepayment and paid to Lender at
the time of prepayment a prepayment premium equal to a percentage, as set forth
in the schedule below, of the then unpaid principal balance of the Loan,
Borrower shall have the option to prepay the Loan in full, but not in part. The
prepayment premium schedule is as follows:

                          MONTHS            PREMIUM
                          1 - 18               3%
                         19 - 36               2%
                         37 - 54               1%
                     55 or thereafter          0%

If there should occur a casualty to or condemnation of any Project or an
acceleration of maturity following an Event of Default and such occurrence
results in prepayment of the Loan, a prepayment premium will be required in the
amount specified above. Notwithstanding anything contained herein to the
contrary, there shall be no prepayment premium if prepayment is occasioned
solely by reason of: (i) a payment or prepayment of a Contract or Instrument by
the obligor(s) thereunder; (ii) a reduction of the outstanding principal balance
of the Loan with the proceeds of a sale of any Contract or Instrument to Lender;
or (iii) a mandatory partial prepayment made in order for the Receivables Loan
to be in conformance with the Borrowing Base.

                   7.3.1 Notwithstanding anything contained in this Agreement to
        the contrary, and except as may be specifically set forth in any Project
        Notes, the Aloha Bay Note or the Office Note, Borrower shall have the
        right to make one or more partial prepayments of the Loan from time to
        time during the Receivables Borrowing 


                                      -47-

<PAGE>   48

        Term so long as: (a) each such partial prepayment, equals or exceeds the
        minimum sum of $2,000,000.00; (b) the aggregate outstanding principal
        balance of the Loan is not reduced to an amount less than $35,000,000.00
        as a result thereof; (c) Borrower pays to Lender, at the time of such
        prepayment, a prepayment premium equal to one percent (1%) of the amount
        of the partial prepayment; and (d) Borrower has given Lender at least
        thirty (30) days prior written notice of each such prepayment; provided,
        however, that any payments or prepayments referred to in items (i), (ii)
        and (iii) of PARAGRAPH 7.3 hereof shall not be subject to any prepayment
        premium.

                   7.3.2 For purposes of determining the month in which any full
        prepayment occurs pursuant to PARAGRAPH 7.3 hereof, the elapsed time of
        the Loan shall be measured from the earlier to occur of: (a) the date of
        the first Advance under the Receivables Loan which is made after the
        Closing Date, or (b) May 7, 1997. In the event Lender and Borrower agree
        to renew or extend the Borrowing Term under this Agreement subsequent to
        the date of this Agreement, the elapsed time of the Loan shall be
        measured from the date of the first Advance to Borrower on or after the
        date of the most recent such renewal or extension of the Borrowing Term
        for the purposes of determining the year in which any full prepayment
        occurs pursuant to PARAGRAPH 7.3 hereof.

               7.4 The Collection Agent, as agent for Lender, shall collect the
payments on the Eligible Receivables used in making the Borrowing Base
computations or otherwise constituting part of the Receivables Collateral and
remit them to Lender according to the terms of the Agency Agreement; and
Borrower will immediately forward all such payments received by it to the
Collection Agent for Lender.

               7.5 Notwithstanding the terms of the Agency Agreement, Borrower's
obligation to make the payments called for in the Documents will not be deemed
satisfied nor will Borrower be credited for such payments until Lender actually
receives such payments from Collection Agent in New York, New York, or such
other place as Lender shall designate from time to time.

               7.6 For the purpose of determining the adequacy of such payments,
Borrower will furnish to Lender, at Borrower's sole cost and expense, no later
than the 15th calendar day of each month commencing with the full calendar month
following the date hereof, a report meeting the following requirements:

                   (i) shows as of the end of the prior month with respect to
        the Receivables Collateral which is used in making Borrowing Base
        computations or otherwise constitutes part of the Receivables
        Collateral:


                                      -48-

<PAGE>   49

                             (A) all payments received during the prior month on
               the Receivables Collateral, allocated as between principal,
               interest, late charges, taxes, and the like,

                             (B) the closing balance as of the end of the prior
               month on each of the Receivables Collateral,

                             (C) The present value of the cash flow (if required
               by Lender) discounted at a rate equal to the greater of: (1)
               Prime plus two percent (2%); or (2) twelve percent (12%) per
               annum (for purposes of this clause, "Prime" shall have the same
               meaning as defined in the Receivables Note), and

                             (D) extensions, refinances, prepayments, and other
               similar adjustments;

                   (ii) itemizes the Receivables Collateral which is used in
        making Borrowing Base computations or otherwise constitutes part of the
        Receivables Collateral to show delinquencies of 30, 60, 90 and in excess
        of 90 days; and

                   (iii) reconciles the prior month's aggregate ending balance
        of Receivables Collateral to the current month's aggregate ending
        balance of Receivables Collateral, reflecting all changes to the
        principal balance payable under the Receivables Collateral (i.e., new
        accounts funded against or used as replacements of ineligible
        Receivables Collateral, principal payments and Receivables Collateral
        released due to cash-outs or replacements).

               7.7 On the basis of such reports, Lender will compute the amount,
if any, which was due and payable by Borrower on the last day of the preceding
month and will notify Borrower as soon as possible of any amount due.

               7.8 If such reports are not timely received, Lender may estimate
the amount which was due and payable; and, in such event, Borrower will pay upon
demand the amount estimated by Lender to be due and payable.

               7.9 If payment is made on the basis of Lender's estimate and
thereafter reports required by this paragraph are received by Lender, the
estimated payment amount shall be adjusted by an additional payment or a refund
to the correct amount, as the reports may indicate; such additional amount to be
paid by Borrower upon demand and such refund to be made by Lender within five
(5) business days after receipt by Lender of a written request therefor by
Borrower. In addition, at each calendar quarter, Borrower will deliver to Lender
a current list of the names, addresses and phone numbers of the Purchasers
related to Eligible Receivables added or deleted since the last quarter.


                                      -49-

<PAGE>   50

               7.10 Lender shall have the exclusive right at any time and from
time to time in its sole discretion to substitute a successor or successors to
any Collection Agent acting under the Agency Agreement.

               7.11 Subject to Lender's rights upon the occurrence of an Event
of Default, all proceeds from the Receivables Collateral (except payments which
are identified by Purchasers as tax or maintenance and other assessment payments
and are required to be so treated by Borrower) which are received during the
Term hereof shall be applied FIRST to the payment of all costs, fees and
expenses which Borrower is required to pay by the Documents, SECOND to accrued
and unpaid interest due on the Receivables Note, THIRD to the unpaid principal
balance of the Receivables Note, AND THEN to the other Obligations in such order
and manner as Lender may determine; provided, however, that so long as no Event
of Default has occurred and is continuing, such proceeds shall not be applied to
any amounts of principal outstanding under any Project Note, the Aloha Bay Note
or the Office Note. Except as applied for the benefit of Borrower pursuant to
the foregoing, unless and until all such Obligations have been Performed,
Borrower shall have no right to any portion of the proceeds of the Receivables
Collateral (except payments which are identified by Purchaser as tax or
maintenance or other assessment payments and are required to be so treated by
Borrower).

               7.12 To the extent not previously paid in accordance with
PARAGRAPH 7.11 hereof, Borrower will pay, or cause to be paid, when due all
payments required to be made pursuant to the Receivables Note or the other
Documents notwithstanding the fact that the future proceeds from the Receivables
Collateral shall be sufficient for that purpose; and all amounts payable by
Borrower under the Receivables Note, or the other Documents, shall be paid
without notice (except as otherwise expressly provided therein), demand,
counterclaim, set-off deduction, recoupment or defense, and without abatement,
suspension, deferment, diminution or pro-ration by reason of any circumstance or
occurrence whatsoever, Borrower's obligation to make such payments being
absolute and unconditional.

               7.13 As additional consideration to Lender, Borrower shall pay to
Lender an Ida Building One Incentive Fee (the "Ida Building One Incentive Fee")
equal to $48,960.00 (less any amounts received by Lender and applied toward
payment of such fee prior to the date of this Agreement) with respect to the
Units sold in Ida Building One or released from the Ida Building One Deed of
Trust. The Ida Building One Incentive Fee shall be paid in installments of
$20.00 per Unit sold or released in Ida Building One until such time as the
Borrower has repaid the Ida Building One Note in full. Thereafter, the Ida
Building One Incentive Fee shall be paid in installments of $1,650.00 per Unit
sold or released in Ida Building One until the entire Ida Building One Incentive
Fee is paid in full. Payments of the Ida Building One Incentive Fee, in
installments of $20.00 per Unit, shall be made together with Ida Building One
Release Fees described in PARAGRAPH 3.12 above, until the Ida Building One Note
is repaid in full; thereafter, payments of the Ida Building One Incentive Fee,
in installments of $1,650.00 per Unit, shall be made at the earlier of the
conveyance to a 


                                      -50-

<PAGE>   51

Purchaser of each sold Unit in Ida Building One or the release of such Unit from
the Ida Building One Deed of Trust. The Ida Building One Incentive Fee shall be
in addition to the principal and interest payments due under the Ida Building
One Note. The Ida Building One Incentive Fee may be prepaid in whole or in part
at any time. The Ida Building One Incentive Fee payable pursuant to this
subparagraph is the same Incentive Fee payable under Paragraph 6.1 of the Ida
Building One Deed of Trust.

               7.14 As additional consideration to Lender, Borrower shall pay to
Lender an Ida Building Two Incentive Fee (the "Ida Building Two Incentive Fee"),
equal to $18,360.00 (less any amounts received by Lender and applied toward
payment of such fee prior to the date of this Agreement) with respect to the
Units sold in Ida Building Two or released from the Ida Building Two Deed of
Trust. The Ida Building Two Incentive Fee shall be paid in installments of
$20.00 per Unit sold or released in Ida Building Two until such time as the Ida
Building Two Note is paid in full. Thereafter, the Ida Building Two Incentive
Fee shall be paid in installments of $2,550.00 per Unit sold or released in Ida
Building Two until the entire Ida Building Two Incentive Fee Two is paid in
full. Payments of the Ida Building Two Incentive Fee, in installments of $20.00
per Unit, shall be made together with Ida Building Two Release Fees described in
PARAGRAPH 3.13 above, until the Ida Building Two Note is repaid in full;
thereafter, payments of the Ida Building Two Incentive Fee, in installments of
$2,550.00 per Unit, shall be made at the earlier of the conveyance to a
Purchaser of each sold Unit in Ida Building Two or the release of such Unit from
the Ida Building Two Deed of Trust. The Ida Building Two Incentive Fee described
herein shall be in addition to the principal and interest payments due under the
Ida Building Two Note. The Ida Building Two Incentive Fee may be prepaid in
whole or in part at any time. The Ida Building Two Incentive Fee payable
pursuant to this subparagraph is the same Incentive Fee payable under Paragraph
6.1 of the Ida Building Two Deed of Trust.

               7.15 As additional consideration to Lender, Borrower shall pay to
Lender an Aloha Bay Incentive Fee (the "Aloha Bay Incentive Fee"), equal to
$32,640.00 (less any amounts received by Lender and applied toward payment of
such fee prior to the date of this Agreement) with respect to the Units sold in
Aloha Bay or released from the Aloha Bay Mortgage. The Aloha Bay Incentive Fee
shall be paid in installments of $20.00 per Unit sold or released in Aloha Bay
until such time as the Borrower has repaid the Aloha Bay Note in full.
Thereafter, the Aloha Bay Incentive Fee shall be paid in installments of
$2,900.00 per Unit sold or released in Aloha Bay until the entire Aloha Bay
Incentive Fee is paid in full. Payments of the Aloha Bay Incentive Fee, in
installments of $20.00 per Unit, shall be made together with Aloha Bay Release
Fees described in PARAGRAPH 3.9 above, until the Aloha Bay Note is repaid in
full; thereafter, payments of the Aloha Bay Incentive Fee, in installments of
$2,900.00 per Unit, shall be made at the earlier of the conveyance to a
Purchaser of each sold Unit in Aloha Bay or the release of such Unit from the
Aloha Bay Mortgage. The Aloha Bay Incentive Fee described herein shall be in
addition to the principal and interest payments due under the Aloha Bay Note.
The Aloha Bay Incentive Fee may be prepaid in whole or in part at any time. The
Aloha Bay Incentive Fee payable pursuant to 


                                      -51-

<PAGE>   52

this subparagraph is the same Incentive Fee payable under Paragraph 6.1 of the
Aloha Bay Mortgage.

               7.16 As additional consideration to Lender, Borrower shall pay to
Lender an Ida Building Addition Incentive Fee (the "Ida Building Addition
Incentive Fee"), equal to $24,480.00 (less any amounts received by Lender and
applied toward payment of such fee prior to the date of this Agreement) with
respect to the Units sold in the Ida Building Addition or released from the Ida
Building Addition Deed of Trust. The Ida Building Addition Incentive Fee shall
be paid in installments of $20.00 per Unit sold or released in the Ida Building
Addition until such time as the Ida Building Addition Note is paid in full.
Thereafter, the Ida Building Addition Incentive Fee shall be paid in
installments of $1,650.00 per Unit sold or released in the Ida Building Addition
until the entire Ida Building Addition Incentive Fee Addition is paid in full.
Payments of the Ida Building Addition Incentive Fee, in installments of $20.00
per Unit, shall be made together with Ida Building Addition Release Fees
described in PARAGRAPH 3.14 above, until the Ida Building Addition Note is
repaid in full; thereafter, payments of the Ida Building Addition Incentive Fee,
in installments of $1,650.00 per Unit, shall be made at the earlier of the
conveyance to a Purchaser of each sold Unit in the Ida Building Addition or the
release of such Unit from the Ida Building Addition Deed of Trust. The Ida
Building Addition Incentive Fee described herein shall be in addition to the
principal and interest payments due under the Ida Building Addition Note. The
Ida Building Addition Incentive Fee may be prepaid in whole or in part at any
time. The Ida Building Addition Incentive Fee payable pursuant to this
subparagraph is the same Incentive Fee payable under Paragraph 6.1 of the Ida
Building Addition Deed of Trust.

               7.17 As additional consideration to Lender, Borrower shall pay to
Lender a Winnick Building Addition Incentive Fee (the "Winnick Building Addition
Incentive Fee"), equal to $22,440.00 (less any amounts received by Lender and
applied toward payment of such fee prior to the date of this Agreement) with
respect to the Units sold in Winnick Building Addition or released from the
Winnick Building Addition Deed of Trust. The Winnick Building Addition Incentive
Fee shall be paid in installments of $20.00 per Unit sold or released in the
Winnick Building Addition until such time as the Borrower has repaid the Winnick
Building Addition Note in full. Thereafter, the Winnick Building Addition
Incentive Fee shall be paid in installments of $2,500.00 per Unit sold or
released in the Winnick Building Addition until the entire Winnick Building
Addition Incentive Fee is paid in full. Payments of the Winnick Building
Addition Incentive Fee, in installments of $20.00 per Unit, shall be made
together with Winnick Building Addition Release Fees described in PARAGRAPH 3.15
above, until the Winnick Building Addition Note is repaid in full; thereafter,
payments of the Winnick Building Addition Incentive Fee, in installments of
$2,500.00 per Unit, shall be made at the earlier of the conveyance to a
Purchaser of each sold Unit in the Winnick Building Addition or the release of
such Unit from the Winnick Building Addition Deed of Trust. The Winnick Building
Addition Incentive Fee described herein shall be in addition to the principal
and interest payments due under the Winnick Building Addition Note. The Winnick
Building Addition Incentive Fee may be prepaid in whole or in part at 


                                      -52-

<PAGE>   53

any time. The Winnick Building Addition Incentive Fee payable pursuant to this
subparagraph is the same Incentive Fee payable under Paragraph 6.1 of the
Winnick Building Addition Deed of Trust.

               7.18 As additional consideration to Lender, Borrower shall pay to
Lender a Second Winnick Building Addition Incentive Fee (the "Second Winnick
Building Addition Incentive Fee"), equal to $18,360.00 with respect to the Units
sold in the Second Winnick Building Addition or released from the Second Winnick
Building Addition Deed of Trust. The Second Winnick Building Addition Incentive
Fee shall be paid in installments of $20.00 per Unit sold or released in the
Second Winnick Building Addition until such time as the Borrower has repaid the
Second Winnick Building Addition Note in full. Thereafter, the Second Winnick
Building Addition Incentive Fee shall be paid in installments of $2,645.00 per
Unit sold or released in the Second Winnick Building Addition until the entire
Second Winnick Building Addition Incentive Fee is paid in full. Payments of the
Second Winnick Building Addition Incentive Fee, in installments of $20.00 per
Unit, shall be made together with the Second Winnick Building Addition Release
Fees described in PARAGRAPH 3.16 above until the Second Winnick Building
Addition Note is repaid in full; thereafter, payments of the Second Winnick
Building Addition Incentive Fee, in installments of $2,645.00 per Unit, shall be
made at the earlier of the conveyance to a Purchaser of each sold Unit in the
Second Winnick Building Addition or the release of such Unit from the Second
Winnick Building Addition Deed of Trust. The Second Winnick Building Addition
Incentive Fee described herein shall be in addition to the principal and
interest payments due under the Second Winnick Building Addition Note. The
Second Winnick Building Addition Incentive Fee may be prepaid in whole or in
part at any time. The Second Winnick Building Addition Incentive Fee payable
pursuant to this subparagraph is the same Incentive Fee payable under Paragraph
6.1 of the Second Winnick Building Addition Deed of Trust.

               7.19 As additional consideration to Lender, Borrower shall pay to
Lender a Project incentive fee (the "Project Incentive Fee") with respect to
each Additional Project for which Advances under the Mortgage Loan Facility are
made by Lender to Borrower, which Project Incentive Fee shall be in an amount
equal to $20.00 multiplied by the number of Units contained within such
Additional Project. The Project Incentive Fee shall be paid in installments of
$20.00 per Unit sold or released in the Additional Project until such time as
the Borrower has repaid the Project Note with respect to such Additional Project
in full. Thereafter, the Project Incentive Fee payable with respect to such
Additional Project shall be paid in installments equal to the amount of the
Project Release Fee payable with respect to such Additional Project per Unit
sold or released until the entire Project Incentive Fee payable with respect to
such Additional Project is paid in full. Payments of the Project Incentive Fee,
in installments of $20.00 per Unit, shall be made together with the Project
Release Fees described in PARAGRAPH 3.17 above until the Project Note executed
and delivered with respect to such Additional Project is repaid in full;
thereafter, payments of the Project Incentive Fee with respect to such
Additional Project, in installments equal to the Project Release Fee applicable
thereto, shall be made at the earlier of the conveyance to a 


                                      -53-

<PAGE>   54

Purchaser of each sold Unit in the Additional Project or the release of such
Unit from the Mortgage recorded with respect to such Additional Project. The
Project Incentive Fee described herein shall be in addition to the principal and
interest payments due under the Project Note executed and delivered by Borrower
with respect to such Additional Project. The Project Incentive Fee may be
prepaid in whole or in part at any time.

                                  ARTICLE VIII

              BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS

               8.1 General Representations and Warranties of Borrower: Borrower
warrants and represents the truth and accuracy of each of the following
warranties and representations, both on the date hereof and on the dates of each
transaction made pursuant to this Agreement. Each of the warranties and
representations shall inure to the benefit of Lender, its successors and
assigns.

               8.2 (a) Except as expressly permitted by PARAGRAPH 8.15 hereof,
        Borrower is, and will continue to be during the Term hereof, duly
        organized, validly existing and in good standing under the laws of the
        State of Nevada and is, and will continue to be during the Term hereof,
        qualified to do business and in good standing in each jurisdiction in
        which it is selling Lots or Units or where the location or nature of its
        properties used or its business makes such qualification necessary
        (except where failure to do so would not adversely affect Lender's
        ability to realize upon the Receivables Collateral or any other security
        for the Performance of the Obligations or materially adversely affect
        the business or financial condition of Borrower or the ability of
        Borrower to complete Performance of the Obligations). Borrower has, and
        will continue to have, powers adequate for making and Performing under
        the Documents, for undertaking and Performing the Obligations, and for
        carrying on its business and owning its properties.

                   (b) Borrower and the Applicable Trusts have good right and
        power to grant the Security Interest in the Receivables Collateral and
        other security for the Obligations and to execute and deliver this
        Agreement and the other Documents and, in the case of Borrower, to
        Perform the Obligations. All action necessary and required by Borrower's
        and the Applicable Trusts' governing documents and all applicable laws
        for the obtaining of the Loan and for the execution and delivery of this
        Agreement and all other Documents executed and delivered in connection
        with the Loan has been duly and effectively taken; and this Agreement is
        and shall be, and all other Documents are and shall be, legal, valid,
        binding and enforceable against Borrower and the Applicable Trusts, to
        the extent they are parties thereto, in accordance with their respective
        terms, and do not violate the usury laws of the State of Arizona,
        Colorado, Florida or Nevada, as applicable. The execution, delivery and
        Performance of the provisions of this Agreement and all of the other
        Documents will 


                                      -54-

<PAGE>   55

        not violate, constitute a default under, or result in the creation or
        imposition of any lien, charge or encumbrance upon any of the properties
        or assets of Borrower or the Applicable Trusts pursuant to, the terms of
        any provision of: any law, regulation, judgment, decree, order,
        franchise or permit applicable to Borrower or the Applicable Trusts; the
        governing documents of Borrower or any of the Applicable Trusts; or any
        contract or other agreement or instrument to which Borrower or any
        Applicable Trust is a party or by which Borrower or the Applicable
        Trusts or Borrower's or the Applicable Trusts' properties or assets are
        bound. No consent of any government or agency thereof, or any other
        person, firm or entity not a party hereto is or will be required as a
        condition to the execution, delivery, Performance or enforceability of
        the Documents.

                      (c) So long as any Applicable Trust continues to have an
        interest in any Receivables Collateral or in any Project, such
        Applicable Trust is, and will continue to be, duly created and validly
        existing under the laws of its state of creation, and each Applicable
        Trust has, and will continue to have during the Term hereof, all
        requisite power, authority and rights adequate for executing and
        delivering the Documents, to the extent it is a party thereto, for
        undertaking and performing the obligations undertaken by it, and for
        carrying on its business and owning its properties.

              8.3     (a) Except as specifically set forth in EXHIBIT 8.3(a)
        attached hereto, there is no action, litigation or other proceeding
        pending or, to Borrower's knowledge, threatened before any arbitration
        tribunal, court, governmental agency or administrative body against
        Borrower or any of the Applicable Trusts, which, if adversely
        determined, might adversely affect Lender's ability to realize upon the
        Receivables Collateral or any other security for the Performance of the
        Obligations, or materially and adversely affect any Project, the
        business or financial condition of Borrower or any of the Applicable
        Trusts, or the ability of Borrower to complete Performance of the
        Obligations; or which questions the validity of the Documents.

                      (b) If Borrower, any of the Applicable Trusts or Guarantor
        becomes a party to any action, litigation or other proceeding which
        asserts a material claim against Borrower, any of the Applicable Trusts
        and/or Guarantor, or Borrower or any of the Applicable Trusts receives a
        notice of noncompliance or becomes the subject of an investigation by a
        governmental agency or administrative body with respect to any portion
        of the Project, then Borrower will, within ten (10) days after it
        obtains knowledge thereof, notify Lender of such action, litigation,
        proceeding, notice or investigation and the particulars thereof.
        Thereafter, if requested by Lender, Borrower will report to Lender with
        respect to the status of such matter and the particulars thereof.
        Borrower shall pay, or cause the payment of, any judgment or decree for
        money damages or a fine or penalty against Borrower or any of the
        Applicable Trusts in excess of $100,000.00; provided, however, that such
        payment 

                                      -55-

<PAGE>   56

        shall not be required hereby so long as the same is being contested in
        good faith by appropriate proceedings promptly instituted and diligently
        conducted and an adequate reserve or bond or other appropriate
        provision, if any, shall have been made therefor as required to be in
        conformity with GAAP. Nothing herein is intended to or shall be
        construed to limit any right of Borrower to exercise any rights or
        remedies against any third parties that may be liable for payments of or
        contributions to any such money damages, fines or penalties.

               8.4 (a) Before Lender shall be obligated to make Advances of the
        Receivables Loan against Eligible Receivables arising from the sale of
        Lots or Units in jurisdictions other than the State in which the Project
        from which such Lot or Unit arose is located and those other
        jurisdictions which are listed in EXHIBIT 8.4(a) hereto, Borrower will
        provide Lender with evidence, satisfactory to Lender, that Borrower has
        complied with all laws of such jurisdiction governing the proposed
        conduct of Borrower.

                   (b) Except for violations which do not individually or in the
        aggregate affect Lender's ability to realize upon the Receivables
        Collateral or any other security for the Performance of the Obligations
        or do not materially and adversely affect the business or financial
        condition of Borrower or the Applicable Trusts or the ability of
        Borrower to complete Performance of the Obligations, Borrower and the
        Applicable Trusts have complied, and will comply, with all laws and
        regulations of the United States, the State, County, if any, and
        municipal jurisdiction in which Lots or Units have been sold or offered
        for sale.

                   (c) Without limiting the generality of any other
        representation or warranty contained herein, the use and occupancy of
        any Project will not violate any private covenant or restriction or any
        zoning, use or similar law, ordinance or regulation affecting the use or
        occupancy of any Project which violation might materially and adversely
        affect the business or financial condition of Borrower or any of the
        Applicable Trusts or the ability of Borrower to complete Performance of
        the Obligations.

               8.5 (a) Each Contract or Instrument at the time it is assigned to
        Lender in connection with the Receivables Loan and this Agreement shall
        be an Eligible Receivable. Borrower and the Applicable Trusts have
        performed all of their obligations to Purchasers required to be
        performed at the time any Eligible Receivable has been delivered to
        Lender or its agent. Borrower further warrants and guarantees the value
        and enforceability of the Receivables Collateral.

                   (b) Except for Upgrades, Borrower, without the prior written
        consent of Lender, will not cancel or materially modify, or consent to
        or acquiesce in any cancellation or material modification to, or solicit
        the prepayment of any Contract 


                                      -56-

<PAGE>   57

        or Instrument used in making Borrowing Base computations or which
        otherwise constitutes part of the Receivables Collateral; or waive the
        timely performance of the obligations of the Purchaser thereunder;
        provided, however, that so long as no Event of Default, and no act or
        event which after the giving of notice or the lapse of time, or both,
        would constitute an Event of Default, has occurred and is continuing:
        (i) Borrower and/or the Applicable Trusts may solicit the prepayment of
        such Contract or Instrument and accept less than the entire remaining
        principal balance as payment in full thereon so long as the amount to be
        received on such Contract or Instrument is at least equal to 85% of the
        unpaid principal balance payable under such Contract or Instrument, (ii)
        Borrower and/or the Applicable Trusts may terminate or, subject to
        subparagraph (d) hereof, modify a Contract or Instrument with respect to
        a certain Lot or Unit and simultaneously enter into a new or revised
        Contract or Instrument for the purchase of a less expensive Lot or Unit
        so long as no deficiency in the Borrowing Base will occur as a result of
        such termination or modification; provided, however, that in no event
        shall such termination or modification occur so as to eliminate the
        default of the contract obligor thereunder, and (iii) notwithstanding
        clause (ii) above, Borrower may modify ineligible Receivables Collateral
        in the ordinary course of Borrower's business. Borrower and the
        Applicable Trusts will not pay or advance directly or indirectly for the
        account of any Purchaser any sum owing by the Purchaser under any of the
        Eligible Receivables used in making Borrowing Base computations or which
        otherwise constitute part of the Receivables Collateral.

                   (c) Borrower at all times will fulfill and will cause its
        affiliates, agents and independent contractors and the Applicable Trusts
        at all times to fulfill in all material respects all obligations of any
        nature whatsoever to Purchasers under all Eligible Receivables which are
        used in making Borrowing Base computations or otherwise constitute part
        of the Receivables Collateral.

                   (d) To the extent that copies have been requested by Lender,
        true and complete copies of the Eligible Receivables and other
        agreements and disclosures required by applicable law and exhibits
        thereto which have been and are being used by Borrower in connection
        with the Project and the sale or offering for sale of Lots or Units
        therein have been delivered to Lender. To the extent that Lender has
        requested copies thereof, such documents are the only ones which have
        been used in connection with the Project and the sale of Lots or Units
        therein. Borrower and the Applicable Trusts, without the prior written
        consent of the Lender, will not materially modify the form of any such
        documents, unless required by law.

                   (e) Borrower will maintain, or will cause to be maintained,
        in good condition and repair all amenities and common areas which have
        been promised or represented as being available to Purchasers and all
        such promised roads and off-site improvements which have not been
        dedicated to or accepted by the responsible governmental authority or
        utility. Borrower will maintain, or will cause the 


                                      -57-

<PAGE>   58

        Applicable Trusts to maintain, a reasonable reserve to assure compliance
        with the terms of the foregoing sentence.

               8.6 SUBJECT ONLY TO THE PROVISIONS OF PARAGRAPH 3.8 HEREOF,
LENDER DOES NOT ASSUME AND SHALL HAVE NO RESPONSIBILITY, OBLIGATION OR LIABILITY
TO PURCHASERS, LENDER'S RELATIONSHIP BEING THAT ONLY OF A CREDITOR WHO HAS
TAKEN, AS SECURITY FOR INDEBTEDNESS OWED TO IT, A COLLATERAL ASSIGNMENT FROM
BORROWER OF RECEIVABLES COLLATERAL. EXCEPT AS REQUIRED BY LAW, OR ANY
GOVERNMENTAL AGENCY, BORROWER WILL NOT, AT ANY TIME, USE THE NAME OR MAKE
REFERENCE TO LENDER WITH RESPECT TO ANY PROJECT, OR THE SALE OF INSTRUMENTS,
CONTRACTS OR OTHERWISE, WITHOUT THE EXPRESS WRITTEN CONSENT OF LENDER.

               8.7 Borrower will undertake the collection of amounts delinquent
under each Eligible Receivable which is used in making Borrowing Base
computations or otherwise constituting part of the Receivables Collateral, will
bear the entire expense of such collection work, and will diligently and timely
do such work respecting collection, including forfeiture or foreclosure
proceedings. Lender shall have no obligation to undertake any collection,
eviction or foreclosure action against the obligor under any Eligible Receivable
or to otherwise realize upon any Eligible Receivable.

               8.8 Borrower will maintain a secure place in its offices at the
address specified above proper and accurate books, records, ledgers, computer
tapes, disks and records correspondence and other papers relating to the
Receivables Collateral. Lender may notify the appropriate Purchasers of the
existence of Lender's interest as assignee in the Receivables Collateral and
request from such Purchasers any information relating to the Receivables
Collateral. Borrower will cooperate with Lender in giving such notice and will
do so under its letterhead if requested.

               8.9 Except for the sales of Lots or Units and the granting of
deeds to Purchasers who are entitled thereto under their respective contracts of
sales, Borrower and the Applicable Trusts, without the prior written consent of
Lender, will not: (a) sell, convey, pledge, hypothecate, encumber or otherwise
transfer any security for the Performance of the Obligations; (b) permit or
suffer to exist any liens, security interests or other encumbrances on any
security for the Performance of the Obligations, except for the Permitted
Encumbrances and liens and Security Interests expressly granted to Lender or as
otherwise contemplated by PARAGRAPH 3.1 hereof; or (c) amend any of the Trust
Agreements; provided, however, that nothing contained herein shall be construed
to restrict or otherwise limit the Applicable Trusts or any Trustee from
fulfilling their respective obligations under the terms and provisions of the
Trust Agreements; and provided, further, that Borrower shall have the right to
terminate any Trust Agreement, or replace any Trustee under an Applicable Trust,
so long as such termination or Trustee replacement does not adversely affect any
Security 


                                      -58-

<PAGE>   59

Interest of Lender under this Agreement (except for the Security Interest in the
Applicable Trust) or Borrower's financial condition at the time of such
termination or Trustee replacement.

               8.10 Borrower shall perform, and shall cause the Trustee of any
Applicable Trust to perform, all of their respective now existing and hereafter
arising obligations to any Purchasers. Furthermore, Borrower shall perform, and
shall cause the Trustee of any Applicable Trust to perform, all of their
respective now existing and hereafter arising obligations under the Trust
Agreements. Borrower will not be in default in Performance of its Obligations
hereunder as a result of a wrongful act or omission of any Trustee while
Borrower is diligently pursuing appropriate legal proceedings for injunctive
relief against any Trustee and/or taking steps to replace any Trustee. Borrower
shall perform all of its obligations under any agreement between Borrower and
any Trustee relating to the payment of compensation to such Trustee for its
services rendered and expenses incurred in connection with the administration of
the Trustee's duties under the Applicable Trust.

               8.11 (a) Borrower will keep or cause to be kept insured against
        risks of physical damage the improved common areas in any Project and
        other amenities which have been promised or represented as being
        available to Purchasers for use by them under policies of "all-risk"
        insurance in an amount not less than the full insurable value on a
        replacement cost basis. All such insurance shall be without cost or
        expense to Lender and shall provide for thirty (30) days notice to
        Lender of cancellation or material change. Borrower will further insure,
        or cause to be insured, against such other risks with respect to any
        Project and Receivables Collateral as Lender may from time to time
        reasonably require.

                    (b) Borrower will maintain such other insurance with
        respect to its business and properties as is normally maintained by
        prudent persons engaged in similar businesses or owning similar property
        similarly situated.

               8.12 (a) This Agreement and the other Documents, certificates,
        financial statements and written materials furnished to Lender by or on
        behalf of Borrower in connection with the transactions contemplated
        hereby do not contain any untrue statement of a material fact or omit to
        state a material fact necessary in order to make the statements
        contained herein not misleading. Other than trends in the national
        economy, of which Borrower expresses no opinion, there is no fact known
        to Borrower which materially and adversely affects or in the future may
        (so far as Borrower can now foresee) materially adversely affect the
        Receivables Collateral or any other security for the Performance of the
        Obligations or the business or financial condition of Borrower, the
        Applicable Trusts or any Project which has not been set forth in this
        Agreement or in the other Documents, certificates, financial statements
        or written materials furnished to Lender in connection with the
        transactions contemplated hereby; provided, however, that Lender
        acknowledges that Borrower 


                                      -59-

<PAGE>   60

        may, after the date hereof, elect to terminate one or more of the
        Applicable Trusts. In connection with any such termination, however,
        Borrower hereby represents that Lender's Security Interests (except for
        the Security Interest in the Applicable Trust) shall not be adversely
        affected by any such termination, nor shall any such termination
        adversely affect the financial condition of Borrower.

                    (b) The fact that Lender's representatives may have made
        certain examinations and inspections or received certain information
        pertaining to the Receivables Collateral or any Project and the proposed
        operation thereof does not in any way affect or reduce the full scope
        and protection of the warranties, representations and Obligations
        contained herein, which have induced Lender to enter into this
        Agreement.

               8.13 (a) Borrower will maintain a standard, modern system of
        accounting and will keep and maintain all books and records in
        accordance with GAAP on a consistent basis.

                    (b) On or before the 15th day of each month, Borrower will
        furnish or cause to be furnished to Lender (i) the reports of Collection
        Agent and Borrower required pursuant to PARAGRAPH 7.6 hereof, and (ii) a
        sales report for the prior month showing the number of sales of Lots or
        Units and the aggregate dollar amount thereof, including down payments.

                    (c) Borrower will furnish or cause to be furnished to
        Lender, as soon as the same are available and, in any event, within one
        hundred twenty (120) days of each fiscal year and within sixty (60) days
        after the end of each interim quarterly fiscal period of the subject, a
        copy of the current financial statements of the Borrower and the
        Guarantor. Such financial statements shall contain a balance sheet as of
        the end of the relevant fiscal period and statements of income and of
        changes in financial position for such fiscal period (together, in each
        case, with the comparable figures for the corresponding period of the
        previous fiscal year), all in reasonable detail, prepared in accordance
        with generally accepted accounting principles consistently applied
        throughout the period involved and with prior periods and, in the case
        of an audited statement, in accordance with generally accepted auditing
        standards; provided, however, that interim quarterly statements shall be
        subject to change as resulting from year-end adjustments and additions
        of appropriate footnotes. All financial statements required pursuant
        hereto shall be certified to, as the case may be, by the chief financial
        officer of the subject of such statements; provided, however, that if
        the statement is an annual statement, the financial statement shall be
        audited by a nationally recognized firm of certified public accountants
        reasonably satisfactory to Lender. Together with such financial
        statements, Borrower will deliver to Lender (i) if such financial
        statements shall have been audited, a certificate from the auditors
        stating that in making the examination necessary for the audit they
        obtained no 


                                      -60-

<PAGE>   61

        knowledge of any default by Borrower in the Performance of any of the
        Obligations, or if they shall have obtained knowledge of any such
        default, specifying the same; and (ii) a certificate signed by the chief
        financial officer of Borrower stating that there exists no Event of
        Default and no condition, event or act, which with notice or lapse of
        time or both, would become an Event of Default or, if any such Event of
        Default or any such condition, event or act exists, specifying the
        nature and period of existence thereof and what action Borrower proposes
        to take with respect thereto.

                    (d) Promptly upon receipt thereof, Borrower will deliver
        copies of each other report submitted to Borrower or Guarantor by
        independent public accountants in connection with any annual, interim,
        or special audit or examination made by them of the books, records or
        financial statements of Borrower or Guarantor.

                    (e) Promptly upon their becoming available, to the extent
        requested by Lender, Borrower will deliver copies of each financial
        statement, report, notice, or proxy statement sent by Borrower, any of
        the Applicable Trusts or Guarantor to stockholders generally, or to any
        governmental organization or authority in connection with the
        Borrower's, any of the Applicable Trusts' or Guarantor's business,
        including, without limitation, any report or notice sent to the United
        States Department of Housing and Urban Development and all departments
        and agencies of the States of Colorado, Nevada, Florida and Illinois and
        the Canadian Provinces of British Columbia and Ontario, and each regular
        or periodic report and any registration statement, prospectus or written
        communication (other than transmittal letters) in respect thereof filed
        by Borrower, any of the Applicable Trusts or Guarantor with, or received
        by Borrower, any of the Applicable Trusts or Guarantor in connection
        therewith from, any securities exchange or the Securities and Exchange
        Commission or any successor agency.

                    (f) To the extent requested by Lender, Borrower will deliver
        to Lender from time to time, as available, and promptly upon amendment
        or effective date, current price lists, sales literature,
        registrations/consents to sell, and other items, data or information
        requested by Lender which relate to any Project or any portion thereof.

                    (g) Immediately upon becoming aware of the existence of an
        Event of Default, or a condition or event which after the giving of
        notice or the lapse of time, or both, would constitute an Event of
        Default, Borrower will deliver to Lender written notice specifying
        therein the nature of the Event of Default, condition or event, as
        applicable, and the action Borrower is taking or proposes to take with
        respect thereto.

                    (h) Immediately upon becoming aware that the holder of any
        obligation or of any indebtedness or other Security of Borrower, any of
        the Applicable 


                                      -61-

<PAGE>   62

        Trusts or Guarantor has given notice or has taken action with respect to
        a claimed default or event of default by Borrower, any of the Applicable
        Trusts or Guarantor thereunder, Borrower will deliver to Lender written
        notice specifying the notice given or action taken by such holder and
        the nature of the claimed default or event of default and what action
        Borrower, such Applicable Trust or Guarantor, as the case may be, is
        taking or proposes to take with respect thereto.

                    (i) Immediately upon becoming aware of any developments or
        other information which may materially and adversely affect the
        properties, business, prospects, profits or condition (financial or
        otherwise) of Borrower, any of the Applicable Trusts or Guarantor or the
        ability of any of them to perform this Agreement, Borrower will deliver
        telephonic or telegraphic notice specifying the nature of such
        development or information and such anticipated effect.

                    (j) So long as the same shall be pertinent to the Loan, any
        Project, the Documents or any transactions contemplated therein,
        Borrower will at its expense (i) permit Lender and its representatives
        at all reasonable times to inspect, audit and copy, as appropriate, any
        Project or any portion thereof, Borrower's facilities, activities, books
        of account, logs and records, (ii) cause its employees, agents and
        accountants to give their full cooperation and assistance in connection
        with any such visits of inspection or financial conferences and (iii)
        make available such further information concerning its business and
        affairs as Lender may from time to time reasonably request; provided,
        however, that Borrower shall not be liable for the resulting costs of
        Lender's staff salaries.

                    (k) Borrower will furnish or cause to be furnished to
        Lender, as soon as the same are available, and in any event within one
        hundred twenty (120) days following the end of each fiscal year of the
        subject, a copy of the financial statements for each of the
        Associations. Such financial statements shall contain a balance sheet as
        of the end of the fiscal year, and a statement of income and of cash
        flows for such fiscal year (together, in each case, with comparable
        figures for the corresponding period of the previous fiscal year), all
        in reasonable detail, prepared in accordance with GAAP, consistently
        applied, throughout the period involved and consistent with prior
        periods and, in the case of an audited statement, with generally
        accepted auditing standards. All financial statements required pursuant
        hereto shall be certified to, as the case may be, by the chief financial
        officer of the subject of such statements; provided, however, that if
        the statement is an annual statement and audited statements of the
        subject have been previously prepared, the statements shall be certified
        by a nationally recognized firm of accountants reasonably satisfactory
        to Lender.

               8.14 Borrower will cause any and all indebtedness (subject to
PARAGRAPH 8.24 hereof, other than indebtedness for reasonable salaries in the
normal course 


                                      -62-

<PAGE>   63

of business) owing by it to its shareholders, directors or officers, as the case
may be, Guarantor, or any member of the Control Group to be, upon the occurrence
and continuation of an Event of Default, subordinated in all aspects to the
Obligations.

               8.15 Borrower will not, and will not permit any of the Applicable
Trusts to, without Lender's prior written consent: (a) sell, lease, transfer or
dispose of all or substantially all of its assets to another entity; or (b)
consolidate with or merge into another entity, permit any other entity to merge
into it or consolidate with it, or permit any transfer of the ownership of, or
power to control, Borrower. Notwithstanding the foregoing, the Applicable Trusts
shall be permitted to transfer title to any Projects or Units or Lots and/or
other assets therein to Borrower in connection with any termination of such
Trust, so long as Lender's Security Interest (other than in the Applicable
Trust) and Borrower's financial condition are not adversely affected thereby.

               8.16 Neither Borrower nor any of the Applicable Trusts are in
default of any payment on account of indebtedness for borrowed money or of any
repurchase obligations in connection with a receivables purchase financing, or
in violation of or in default under any material term in any material agreement,
instrument, order, decree or judgment of any court, arbitration or governmental
authority to which it is a party or by which it is bound.

               8.17 Borrower and each of the Applicable Trusts have filed all
tax returns and paid all taxes, assessments, levies and penalties, if any, in
respect thereof required to be filed by it or paid by it to any governmental or
quasi-governmental authority or subdivision; provided, however, that the
foregoing items need not be paid while being contested in good faith and by
appropriate proceedings (in the written opinion of Borrower's independent
counsel, which shall be submitted to Lender, in any case involving over
$50,000.00); and provided, further, that adequate accounting reserves (in the
written opinion of Borrower's independent accountants, which shall be delivered
to Lender) have been established with respect thereto, and provided, further,
that any of Borrower's or the Applicable Trusts' title to, and its right to use,
its properties shall not be materially and adversely affected thereby. All real
estate taxes and assessments have been paid which are due and owing in
connection with the common areas of any Project and other amenities which have
been promised or represented as being available to Purchasers for use by them.
Borrower will use its best efforts to provide to Lender not more than thirty
(30) days after such taxes and assessments would become delinquent if not paid
evidence that all such taxes and assessments on the Project common areas have
been paid in full.

               8.18 Borrower will pay to Lender on demand all out-of-pocket
costs and expenses (excluding Lender's staff salaries) incurred or to be
incurred by Lender in connection with the initiation, documentation and closing
of the Loan, the making of Advances hereunder, the protection of the security
for the Performance of the Obligations, or the enforcement of the Obligations
against Borrower or Guarantor, including, without limitation, travel costs, all
attorneys' fees, all filing and recording fees, all charges for 


                                      -63-

<PAGE>   64

consumer credit reports, all revenue and documentary stamp and intangible taxes,
and all fees and expenses of Collection Agent to perform the services
contemplated hereunder and under the terms of the Agency Agreement, and all fees
and expenses of the Custodian to perform the services contemplated hereunder and
under the terms of the Custodial Agreement.

               8.19 Borrower will INDEMNIFY, SAVE AND HOLD HARMLESS, and defend
Lender, its successors, assigns and shareholders (including corporate
shareholders), and the directors, officers, employees, agents and servants of
the foregoing, from any and all losses, costs, expenses (including, without
limitation, court costs and attorneys' fees), demands, claims, suits,
proceedings (whether civil or criminal), orders, judgments, penalties, fines and
other sanctions arising from or brought in connection with (a) any Project, the
security for the Performance of the Obligations, Lender's status by virtue of
the Assignments, creation of Security Interests, the terms of the Documents or
the transactions related thereto, or any act or omission of Borrower, Collection
Agent or Custodian, or the employees or agents of either of them, whether actual
or alleged, including, without limitation, violations of Regulation Z of the
Board of Governors of the Federal Reserve System or any other law, rule or
regulation relating to the Receivables Collateral and sales of Lots or Units,
and (b) any and all brokers' commissions or finders' fees or other costs of
similar type, or claims by any broker, agent or other party in connection with
the transactions contemplated by this Agreement. On written request by a Person
covered by the above agreement of indemnity, Borrower will undertake, at its own
cost and expense, on behalf of such indemnitee, using counsel satisfactory to
the indemnitee, the defense of any legal action or proceeding to which such
Person shall be a party, provided that such action or proceeding shall result
from, or grow or arise out of any of the events set forth in this paragraph.
Lender represents and warrants to Borrower that Lender has no knowledge of
broker involvement in the transactions contemplated by the Documents.

               8.20 Borrower will not directly or indirectly invest all or any
part of the proceeds of the Loan in any investment security subject to the
margin requirements of Regulation "G".

               8.21 Borrower will execute or cause to be executed all documents
and do or cause to be done all acts necessary for Lender to perfect and to
continue the perfection of the Security Interest of Lender in the Receivables
Collateral, the Applicable Trusts or the other security for the Performance of
the Obligations or otherwise to effect the intent and purposes of the Documents.
Borrower will prosecute or defend any action involving the priority, validity or
enforceability of the Security Interest granted to Lender; provided, however,
that, at Lender's option, Lender may do so at Borrower's expense.

               8.22 Borrower is fully familiar with all of the terms and
conditions of the Documents and is not in default thereunder. No act or event
has occurred which after notice and/or lapse of time would constitute such a
default or an Event of Default.


                                      -64-

<PAGE>   65

               8.23 FINANCIAL COVENANTS. Borrower hereby covenants and agrees to
comply with the financial covenants hereinafter set forth in this PARAGRAPH 8.23
during the entire Term of the Loan, which financial covenants shall be tested on
a semiannual basis, upon the expiration of the second fiscal quarter and fourth
fiscal quarter of Borrower. The compliance of Borrower with respect to the
financial covenants set forth below shall be confirmed by Borrower's delivery to
Lender of a certification in the form attached hereto as EXHIBIT 8.23, which
certification shall be signed by a duly-authorized officer of Borrower and shall
be delivered to Lender within sixty (60) days after the expiration of each
second fiscal quarter and within one hundred twenty (120) days after the
expiration of each fourth fiscal quarter of Borrower:

                    (a) Tangible Net Worth. Until the full and complete
        Performance of all of Borrower's Obligations under the Loan, the
        Consolidated Tangible Net Worth of Borrower and its Subsidiaries shall
        be, at all times, not less than $20,000,000.00 (the "Tangible Net Worth
        Base"); provided, however, that the Tangible Net Worth Base shall be
        increased each fiscal quarter by an amount equal to fifty percent (50%)
        of the consolidated net income (if any) of Borrower and its
        Subsidiaries, commencing with Borrower's fiscal quarter ending November
        30, 1997; and provided, further, that the Tangible Net Worth Base shall
        not be increased to more than $25,000,000.00. In the event that Borrower
        and its Subsidiaries do not realize any net income for any fiscal
        quarter, or if there is a net loss for such quarter, the Tangible Net
        Worth Base applicable to the next successive fiscal quarter shall remain
        unchanged and shall not in any event be reduced or decreased. For
        purposes of this PARAGRAPH 8.23, "Consolidated Tangible Net Worth" shall
        mean, on the date of determination thereof, the consolidated net worth
        of Borrower and its Subsidiaries, as determined in accordance with GAAP,
        after deducting the value of patents, trademarks, goodwill and other
        intangible assets, the value of assets treated as "questionable" by the
        accounting firm which shall have prepared Borrower's most recent
        financial statement, and after deducting all amounts due Borrower from
        its affiliates or from Guarantor (provided that the deduction for any
        amounts owed to Borrower from Mego Mortgage shall include only amounts
        which are owed in excess of $1,000,000.00). It is agreed that intangible
        assets shall not include deferred selling expenses determined in
        accordance with GAAP or interest-only strip securities and other related
        mortgage securities, both of which shall be deemed to be tangible
        assets. For the purposes of determining the quarterly increases in the
        Tangible Net Worth Base, the net income of Borrower and its Subsidiaries
        shall be determined in accordance with GAAP.

                    (b) Consolidated Debt to Consolidated Tangible Net Worth.
        The ratio of consolidated total liabilities of Borrower and its
        Subsidiaries to the Consolidated Tangible Net Worth of Borrower and its
        Subsidiaries shall not, at any time, be greater than 4:1.


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<PAGE>   66

                    (c) Dividends. Borrower will not declare or pay any
        dividends so long as any Event of Default, or any failure by Borrower or
        Guarantor to make any payment when due, has occurred and is continuing.

                    (d) Marketing Costs to Net Sales. On the final day of
        Borrower's second (2nd) fiscal quarter and fourth (4th) fiscal quarter
        for each of Borrower's fiscal years, the ratio of the total of
        Borrower's costs and expenses for commissions and selling relating to
        retail lot sales and time-share sales (exclusive of any fees payable by
        Borrower to Hospitality Franchise Systems, Inc.) ("Marketing Costs") for
        the immediately preceding four (4) fiscal quarters to the total of
        Borrower's processed sales of retail lots and time-share interests for
        the same period (each net of cancellations of such sales) ("Net Sales")
        shall not be greater than 1.1:2; provided, however, that a breach of
        this covenant shall not be an Event of Default, but in the event that
        there are two (2) consecutive occurrences of a breach of this covenant
        or in the event a breach of this covenant continues without cure for a
        period in excess of sixty (60) days after the end of any test quarter,
        Lender shall have no further obligation to make any Advances hereunder,
        including, without limitation, any Receivables Advances or any Advances
        under the Mortgage Loan Facility until such breach is cured.

               8.24 Borrower will not directly or indirectly make or permit any
of its Subsidiaries to make loans to any member of the Control Group of Borrower
(other than to the Guarantor or any Subsidiaries of Borrower), or to any member
of the Control Group of Guarantor, including, without limitation, and in any
event, loans to any one or more of Messrs. Robert Nederlander, Jerome J. Cohen,
Eugene I. Schuster, Herbert B. Hirsch and Don A. Mayerson, which in the
aggregate exceed $1,000,000.00 outstanding at any time. Borrower will not
directly or indirectly provide or permit any of its Subsidiaries to provide
compensation for services rendered, including, without limitation, consulting
fees, management fees, salaries, bonuses or any other nondividend compensation,
to members of the Control Group for services rendered which in the aggregate
exceeds $1,500,000.00 per annum. The compliance of Borrower with respect to the
foregoing covenant shall be confirmed on a semiannual basis by Borrower's
delivery to Lender of the certification described in PARAGRAPH 8.23 above within
sixty (60) days after the expiration of each second fiscal quarter and within
one hundred twenty (120) days after the expiration of each fourth fiscal quarter
of Borrower.

               8.25 Borrower and its Subsidiaries will not have or incur any
nontax sharing indebtedness (as hereinafter defined) to Guarantor, its
successors or assigns, which results in the aggregate outstanding principal
balance of all nontax sharing indebtedness of Borrower and its Subsidiaries to
Guarantor exceeding the sum of $2,000,000.00 in the aggregate. As used herein,
the term "nontax sharing indebtedness" means all indebtedness other than amounts
payable to Guarantor pursuant to tax sharing arrangements among Guarantor and
its Subsidiaries. The compliance of Borrower with respect to the foregoing
covenant shall be 


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<PAGE>   67

confirmed on a semiannual basis by Borrower's delivery to Lender of the
certification described in PARAGRAPH 8.23 above within sixty (60) days after the
expiration of each second fiscal quarter and within one hundred twenty (120)
days after the expiration of each fourth fiscal quarter of Borrower.

               8.26 The representations, warranties and covenants contained in
this ARTICLE VIII are in addition to, and not in derogation of, the
representations and warranties elsewhere contained herein in the other
Documents.

               8.27 Except as disclosed to and permitted, in writing, by Lender,
the representations and warranties contained in this Agreement are continuing
and shall be deemed to be made and reaffirmed prior to the making of each
Advance under this Agreement.

               8.28 To the extent that Borrower reacquires any Units in a
Project owned by an Applicable Trust following their sale to Purchasers,
Borrower shall reconvey the same to the Trustee under such Applicable Trust
promptly upon such reacquisition, but only to the extent such reconveyance is
required under the Applicable Trust and, if so, then such Units shall be
reconveyed to the Trustee under such Applicable Trust subject only to those
matters to which such Units were subject to immediately prior to their transfer
to the Purchaser thereof and to nondelinquent ad valorem taxes for the current
year.

               8.29 Borrower shall not, without the prior written consent of
Lender, sell Units under a Land Sales Contract. For purposes hereof, a Land
Sales Contract shall mean a contract for deed, contract to convey, agreement for
sale or any similar contract pursuant to which Borrower has conveyed to
Purchaser equitable title in the Unit and under which the Borrower is obligated
to convey to the Purchaser the remainder of Borrower's title, whether legal or
equitable, on payment in full of all monies due under the contract. Land Sales
Contract do not include purchase contracts or similar executory contracts which
are intended to control the rights and obligations of parties pending a closing
of a sale or purchase transaction, including, without limitation, the "Grand
Flamingo Suites Purchase Agreement" a copy of which was previously delivered to
Lender.

               8.30 Borrower shall give to Lender, as soon as is reasonably
possible following the giving or receipt thereof, copies of any nonroutine
notices given to or received by any Trustee.

               8.31 On or before June 30 and December 31 of each year during the
Term, Borrower shall give to Lender a current report concerning the status of
the litigation matters described in the attached EXHIBIT "8.31".

               8.32 Borrower shall (a) maintain or cause to be maintained, in
full force and effect during the Term, a license agreement (the "License
Agreement") providing for access 


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<PAGE>   68

by Purchasers of Units in each of Suites Phase II, Fountains, Winnick, Ida
Building One, Ida Building Two, Winnick Building Addition, Ida Building Addition
and Second Winnick Building Addition to common recreational areas and facilities
and other amenities of the Grand Flamingo Towers Resort Club (the "Towers
Club"), or (b) provide or cause to be provided to such Purchasers, alternate
recreational areas and facilities and other amenities reasonably equivalent to
those provided by the Towers Club pursuant to the License Agreement, as
originally executed, in the event the License Agreement is terminated prior to
the expiration of the Term.

               8.33 (a) Borrower represents and warrants that each Trustee under
        any Applicable Trust is lawfully seized of a good and marketable title
        in fee simple in the Project which is the subject of the Applicable
        Trust and the buildings and other improvements erected thereon, and that
        such Project is free from liens, claims, restrictions or encumbrances,
        except for such liens, claims, restrictions or encumbrances as are
        approved by Lender.

                    (b) Borrower does hereby warrant and shall forever defend
        the title of any Project owned by an Applicable Trust against the claims
        of all Persons whatsoever, subject to the right, title and interest of
        the Trustee of the Applicable Trust, Purchasers, Persons claiming by,
        through or under the Trustee of the Applicable Trust or Purchasers and
        to matters approved by Lender.

               8.34 Throughout the Term, Borrower shall permit FPSI to oversee
all of the servicing activities with respect to Receivables Collateral that are
pledged by Borrower to Lender, which oversight functions shall be performed by
FPSI pursuant to the Oversight Agreement. Lender shall cause FPSI to waive any
fee otherwise payable to it as a result of such oversight activities; however,
Borrower shall have the responsibility for reimbursing FPSI for any actual
out-of-pocket costs and expenses incurred by it to the extent provided in the
Oversight Agreement.

                                   ARTICLE IX

                                    DEFAULTS

               9.1 The occurrence of any of the following events or conditions
shall constitute an Event of Default by Borrower under the Documents:

                    (a) Lender fails to receive from Borrower when due and
        payable (i) any amount that Borrower is obligated to pay on any Note
        executed by Borrower pursuant to the terms of this Agreement, or (ii)
        any other payment due under the Documents; and such failure shall
        continue for five (5) days after notice thereof to Borrower, except for
        the payment of the final installment due under any of the Notes, for
        which no grace period is allowed;


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<PAGE>   69

                    (b) any representation or warranty of Borrower contained in
        the Documents or in any certificate furnished under the Documents proves
        to be, in any material respect, false or misleading as of the date
        deemed made;

                    (c) there is a default in the Performance of the Obligations
        set forth in PARAGRAPHS 3.3, 8.9 OR 8.15 hereof;

                      (d) there is a default in the Performance of any other
        Obligations or a violation of any term, covenant or provision of the
        Documents (other than a default or violation referred to elsewhere in
        this PARAGRAPH 9.1 or under PARAGRAPH 8.23(d) hereof) and such default
        or violation continued unremedied (i) for a period of five (5) days
        after notice thereof to Borrower in the case of a default or violation
        of PARAGRAPHS 8.8, 8.12 OR 8.13 hereof or any other default or violation
        which can be cured by the payment of money alone, or (ii) for a period
        of thirty (30) days after notice to Borrower in the case of any other
        default or violation;

                    (e) an "Event of Default," as defined elsewhere herein or in
        any of the other Documents, occurs, or an act or event occurs under any
        of the Documents, whether or not denominated as an "Event of Default,"
        which expressly entitles Lender to accelerate any of the Obligations
        and/or exercise its other remedies upon the occurrence of an Event of
        Default hereunder;

                    (f) any material default by Borrower or any of the
        Applicable Trusts under any other agreement evidencing, guaranteeing, or
        securing borrowed money or a receivables purchase financing has occurred
        permitting the acceleration of such indebtedness or repurchase
        obligations, which accelerated payment or repurchase obligations are in
        excess of $100,000.00 in the aggregate;

                    (g) any final, nonappealable judgment or decree for money
        damages or for a fine or penalty against Borrower or any of the
        Applicable Trusts which is not paid and discharged or stayed within
        thirty (30) days thereafter and when aggregated with all other
        judgment(s) or decree(s) that have remained unpaid and undischarged or
        unstayed for such period is in excess of $100,000.00;

                    (h) any party holding a lien or security interest in the
        Receivables Collateral or any other security for the Performance of the
        Obligations or a lien on any common areas or other amenities in any
        Project commences proceedings for foreclosure or similar sale thereof
        and such sale or proceeding is not discharged in full or stayed within
        thirty (30) days after commencement thereof;

                    (i) (i) Borrower, any of the Applicable Trusts or Guarantor
        becomes insolvent or unable to pay its debts when due or generally fails
        to pay its 


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<PAGE>   70

        debts when due; (ii) Borrower, any of the Applicable Trusts or Guarantor
        files a petition in any bankruptcy, reorganization, winding-up or
        liquidation proceeding or other proceeding analogous in purpose or
        effect relating to such entity; applies for or consents to the
        appointment of a receiver, trustee or other custodian for the
        bankruptcy, reorganization, winding-up or liquidation of such entity;
        makes an assignment for the benefit of creditors; or admits in writing
        that it is unable to pay its debts; (iii) any court order or judgment is
        entered confirming the bankruptcy or insolvency of Borrower, any of the
        Applicable Trusts or Guarantor or approving any reorganization,
        winding-up or liquidation of such entity or a substantial portion of its
        assets; (iv) there is instituted against Borrower, any of the Applicable
        Trusts or Guarantor any bankruptcy, reorganization, winding-up or
        liquidation proceeding or other proceeding analogous in purpose or
        effect and the same is not dismissed within sixty (60) days after the
        institution thereof; or (v) a receiver, trustee or other custodian is
        appointed for any part of the Receivables Collateral or any Project or
        all or a substantial portion of the assets of Borrower, any of the
        Applicable Trusts or any Guarantor;

                    (j) Performance by Borrower, any of the Applicable Trusts or
        Guarantor of any material obligation under any Document or the
        Guarantee, as the case may be, is rendered unenforceable in any material
        respect, or the Guarantor repudiates, rescinds, limits or annuls its
        Guarantee;

                    (k) there occurs a material adverse change in any Project or
        in the business or financial condition of Borrower, any of the
        Applicable Trusts or Guarantor or in the Receivables Collateral or any
        other security for the Performance of the Obligations, which change is
        not enumerated in this PARAGRAPH 9.1 and as the result of which Lender
        in good faith deems the prospect of Performance of the Obligations
        impaired or its security therefor imperiled;

                    (l) Borrower is in default of that license agreement between
        Borrower and Hospitality Franchise Systems, Inc. dated as of April 18,
        1995, as amended, modified, restated or replaced, to the extent such
        default has a material and adverse effect on any Project.

               9.2 At any time after an Event of Default has occurred and while
it is continuing, Lender shall have the right to do any one or more of the
following:

                    (a) cease to make further Advances;

                    (b) declare all Notes evidencing the Loan, together with
        prepayment premiums and all other sums owing by Borrower to Lender in
        connection with the Documents, immediately due and payable without
        notice, presentment, demand or protest, which are hereby waived by
        Borrower;


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<PAGE>   71

                    (c) with respect to the Receivables Collateral, (i)
        institute collection actions against all Persons obligated therein, (ii)
        enter into modification agreements and make extension agreements with
        respect to payments and other performances, (iii) release Persons liable
        for the payment and performance thereof or the securities for such
        payment and performance, and (iv) settle and compromise disputes with
        respect to payments and performances claimed due thereon, all without
        notice to Borrower, without being called to account therefor by Borrower
        and without relieving Borrower from Performance of the Obligations; and

                    (d) proceed to protect and enforce its rights and remedies
        under this Agreement or any other Documents and to foreclose or
        otherwise realize upon its security for the Performance of the
        Obligations, or to exercise any other rights and remedies available to
        it at law, in equity or by statute.

The rights and powers granted pursuant to this paragraph are not intended to
limit the rights and powers granted elsewhere herein.

               9.3 Notwithstanding anything contained in the Documents to the
contrary, Lender shall have the right to cease to make further Advances at any
time that a condition or event which after the giving of notice or the lapse of
time, or both, would constitute an Event of Default, has occurred and is
continuing.

               9.4 Notwithstanding anything in the documents to the contrary,
while an Event of Default exists, any cash received and retained by Lender in
connection with the Receivables Collateral may be applied to payment of the
Obligations in the manner provided in PARAGRAPH 9.6 hereof.

               9.5 (a) Pursuant to its rights under PARAGRAPH 9.2 hereof,
        following an Event of Default, and subject to the terms and conditions
        hereof, Lender may sell, assign and deliver the Receivables Collateral
        and any and all other security for the Obligations, or any part thereof,
        at public or private sale, conducted in a commercially reasonable manner
        by an officer, or agent of, or auctioneer or attorney for, Lender at
        Lender's place of business or elsewhere, for cash, upon credit or future
        delivery, and at such price or prices as Lender shall reasonably
        determine, and Lender may be the purchaser of any or all of the
        Receivables Collateral or any other security for the Obligations so
        sold. Lender may, in its reasonable discretion, at any such sale,
        restrict the prospective bidders or purchasers as to number, nature of
        business and investment intention, and, without limitation, may require
        that the Persons making such purchases represent and agree to the
        satisfaction of Lender that they are purchasing the Receivables
        Collateral or any other security for the Obligations for their account,
        for investment, and not with a view to the distribution or resale of any
        thereof. Lender shall have no obligation to delay sale of any
        Receivables Collateral or any other 


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<PAGE>   72

        security for the Obligations to be registered for public sale under the
        Securities Act of 1933, as amended, and any applicable state securities
        laws. Private sales made without registration shall not be deemed to
        have been made in a commercially unreasonable manner by virtue of any
        terms less favorable to the seller resulting from the private nature of
        such sales.

               In view of the fact that federal and state securities or other
        laws may impose certain restrictions on the method by which a sale of
        Receivables Collateral or any other security for the Obligations may be
        effected after an Event of Default, Borrower agrees that upon the
        occurrence and continuation of an Event of Default, Lender may, from
        time to time, attempt to sell all or any part of the Receivables
        Collateral or any other security for the Obligations by a private
        placement restricting the bidder and prospective purchasers, and in so
        doing, Lender may solicit offers to buy the Receivables Collateral or
        any other security for the Obligations, or any part of it for cash, from
        a limited number of purchasers deemed by Lender, in its reasonable
        judgment, to be respectable parties who might be interested in
        purchasing the Receivables Collateral or any other security for the
        Obligations, and if Lender, solicits such offers from not less than
        three (3) such investors, then the acceptance by Lender of the highest
        offer obtained therefrom shall be deemed to be a commercially reasonable
        method of disposition of such collateral. Lender shall give Borrower at
        least fifteen (15) days prior written notice, which 15-day notice shall
        be deemed to be reasonable (notwithstanding provisions of subparagraph
        (b) below), of the day on or after which any such private placement is
        to be made.

               (b) Without prejudice to the right of Lender to make such sale
        within such shorter period as may be reasonable under the circumstances,
        foreclosure sale of all or any part of the Receivables Collateral and
        any and all other security for the Obligations shall be deemed held
        pursuant to reasonable notice if held:

                   (i) Forty-five (45) days after notice is given, based upon
               default consisting of insolvency, bankruptcy or other default of
               a nature which cannot be corrected by Borrower, or default for
               which no grace period is specified herein; or

                   (ii) Sixty (60) days after notice of an act, circumstance or
               event which, if uncorrected, after expiration of any applicable
               grace period, shall constitute a default hereunder.

        Where any notice to Borrower and grace period thereafter is required
        under this Agreement, such grace period shall be deducted from the
        60-day notice of foreclosure sale specified in item (ii) above, so that
        the maximum period between notice to Borrower of an act, circumstance or
        event which, if uncorrected after elapse of any applicable grace period,
        would constitute an Event of Default and the foreclosure sale 


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<PAGE>   73

        of the Receivables Collateral and any and all other security for the
        Obligations based upon such Event of Default shall in no event be
        required to exceed sixty (60) days.

               (c) At any sale following an Event of Default, the Receivables
        Collateral and any and all other security for the Obligations may be
        sold as an entirety or in partial interests. Lender shall not be
        obligated to make any sale pursuant to any notice previously given. In
        case of any sale of all or any part of the Receivables Collateral or any
        other security for the Obligations on credit or for future delivery, the
        Receivables Collateral or any other security for the Obligations so sold
        may be retained by Lender until the selling price is paid by the
        purchaser thereof, but Lender shall not incur any liability in case of
        the failure of such purchaser to take up and pay for the collateral so
        sold; and in case of any such failure, such Receivables Collateral or
        such other security for the Obligations may again be sold under and
        pursuant to and in compliance with the provisions hereof.

               (d) In connection with sales made following an Event of Default,
        Lender may, in the name and stead of Borrower or in its own name, make
        and execute all conveyances, assignments and transfers of the
        Receivables Collateral sold pursuant to this Agreement; and Lender is
        hereby appointed Borrower's attorney-in-fact for this purpose.
        Nevertheless, Borrower will, if so requested by Lender, ratify and
        confirm any sale or sales by executing and delivering to Lender, or to
        such purchaser or purchasers, all such instruments as may, in the
        judgment of Lender, be advisable for that purpose.

               (e) The receipt by Lender of the purchase money paid at any sale
        made following an Event of Default shall be a sufficient discharge
        therefor to any purchaser of the Receivables Collateral or any portion
        thereof, and no such purchaser, after paying such purchase money and
        receiving such receipt, shall be bound to see to the application of such
        purchase money or any part thereof or in any manner whatsoever be
        answerable for any loss, misapplication or nonapplication of any such
        purchase money, or any part thereof, or be bound to inquire as to the
        authorization, necessity, expediency or regularity of any such sale.

               (f) Each purchaser at any sale following an Event of Default
        shall hold the Receivables Collateral and such other security for the
        Obligations so sold absolutely free from every claim or right of
        Borrower, including, without limitation, any equity or right of
        redemption of Borrower, which Borrower hereby specifically waives to the
        extent Borrower may lawfully do so. Lender, its employees and agents
        shall after such sale be fully discharged from any liability or
        responsibility in any matter relating to the Receivables Collateral and
        such other security that is sold and resulting from any action or
        inaction on the part of such purchaser or any successor-in-interest of
        such purchaser.


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<PAGE>   74

               9.6 The proceeds of any sale of all or any part of the
Receivables Collateral and such other security for the Obligations shall be
applied in the following order or priorities; first, to the payment of all costs
and expenses of such sale, including, without limitation, reasonable
compensation to Lender and its agents, attorneys' fees, and all other expenses,
liabilities and advances incurred or made by Lender, its agents and attorneys,
in connection with such sale, and any other unreimbursed expenses for which
Lender may be reimbursed pursuant to the Documents; second, to the payment of
the Obligations, in such order and manner as Lender shall in its discretion
determine, with no amounts applied to payment of principal until all interest
has been paid; and third, to the payment to Borrower, its successors or assigns,
or to whomsoever may be lawfully entitled to receive the same, or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds.

               9.7 Lender may, at its option, and without any obligation to do
so (but subject to any prior notice requirements, if any, contained in any
Mortgage with respect to the exercise of any similar rights of Lender under such
Mortgage), pay, perform and discharge any and all amounts, costs, expenses and
liabilities herein agreed to be paid or performed by Borrower if Borrower fails
to do so; and for such purposes Lender may use the proceeds of the Receivables
Collateral or any other security for the Obligations and is hereby appointed
Borrower's attorney-in-fact. All amounts expended by Lender in so doing or in
exercising its remedies hereunder following an Event of Default shall become
part of the Obligations secured hereby, shall be immediately due and payable by
Borrower to Lender upon demand therefor, and shall bear interest at the Overdue
Rate from the dates of such expenditures until paid. Exercise by Lender of its
option under this paragraph will not cure any default of Borrower.

               9.8 No remedy herein or in any other Document conferred on or
reserved to Lender is intended to be exclusive of any other remedy or remedies,
but each and every such remedy shall be cumulative and shall be in addition to
every other remedy given hereunder, under any other Document or now or hereafter
existing at law or in equity. Notwithstanding anything herein to the contrary,
in any nonjudicial, public or private sale or sales under the Uniform Commercial
Code or applicable real property law or in any judicial foreclosure and sale of
the Receivables Collateral or any other security for the Obligations, the
Receivables Collateral or any other security for the Obligations may be sold in
any manner whatsoever not prohibited by law. No delay or omission to exercise
any right or power shall be construed to be a waiver of any default or
acquiescence therein or a waiver of any right or power; and every such right and
power may be exercised from time to time and as often as may be deemed
expedient. Lender's acceptance of any performance due hereunder which does not
comply strictly with the terms hereof shall not be deemed to be a waiver of any
right of Lender to strict Performance by Borrower. Acceptance of past due
amounts or partial payments shall not constitute a waiver of full and timely
payment of the Obligations. No Event of Default, declaration of the unpaid
principal of the Loan to be immediately due and 


                                      -74-

<PAGE>   75

payable or exercise of any other right to remedy upon default shall stay, waive,
or otherwise affect Lender's right to receive payments on and other proceeds of
the Receivables Collateral.

               9.9 Borrower, for itself and for all who may claim through or
under it, hereby expressly waives and releases all right to have the Receivables
Collateral or any other security for the Performance of the Obligations, or any
part thereof, marshaled on any foreclosure, sale or other enforcement hereof.

               9.10 While an Event of Default exists, Borrower will, on the
request of Lender, assemble the Receivables Collateral not already in Lender's
possession and make it available to Lender at a time and place reasonably
convenient to Lender.

                                    ARTICLE X

                                POWER OF ATTORNEY

               For the purpose of enabling Lender to protect and preserve its
Security Interest in the Receivables Collateral, the Applicable Trusts and all
other security for the Obligations and its rights and remedies under this
Agreement and the Documents, Borrower does hereby constitute and appoint Lender,
and its successors and assigns, to be Borrower's true and lawful
attorney-in-fact upon the occurrence of an Event of Default, and during the
continuance thereof, to perform any act, take any action, execute and sign any
document, statement, instrument or other writing, and to do and perform any and
all deeds and things in the name, place, and stead of Borrower, which Lender in
its discretion shall determine necessary or required to protect and preserve its
Security Interest in the Receivables Collateral, the Applicable Trusts or any
other security for the Obligations and its rights and remedies under this
Agreement and the Documents, or which Borrower is required or obligated to
perform under the terms of this Agreement or the Documents.

                                   ARTICLE XI

                         CONSTRUCTION AND GENERAL TERMS

               11.1 All monies payable under the Project Notes, the Aloha Bay
Note or the Office Note shall be paid to Lender at the address first set forth
in this Agreement. All payments to be made under the Receivables Note shall be
made to the Collection Agent.

               11.2 This Agreement and the other Documents exclusively and
completely state the rights and obligations of Lender and Borrower with respect
to the Loan. No modification, variation, termination, discharge or abandonment
hereof and no waiver of any of the provisions or conditions shall be valid
unless in writing and signed by duly authorized representatives of Lender and
Borrower or successors, transferees or assigns of either, subject, however, to
the limitations on assignment hereby by Borrower. This Agreement 


                                      -75-

<PAGE>   76

supersedes any and all prior agreements or understandings, written or oral,
between Borrower and Lender (other than in the other Documents) concerning this
transaction.

               11.3 The powers and agency hereby granted by Borrower are coupled
with an interest and are irrevocable and are granted as cumulative to the
remedies for collection of the indebtedness secured hereby provided by law.

               11.4 This Agreement may be executed simultaneously in any number
of identical copies each of which shall constitute an original for all purposes.

               11.5 Any notice required or permitted to be given hereunder shall
be in writing and shall be (a) personally delivered to the party being notified
by courier or overnight courier, (b) transmitted by legible facsimile
transmission so long as a hard copy of such notice is simultaneously sent by the
notifying party by courier or overnight courier, or (c) transmitted by postage
prepaid, certified or registered mail to such party at its address after its
signature on the signature page hereof or such other address as the party being
notified may have otherwise designated in a notice given as provided in this
paragraph. Such notice shall be deemed to be effective, unless actual receipt is
expressly elsewhere specified herein, upon (x) the date of receipt or (y) the
date five (5) days after posting if transmitted by mail, whichever shall first
occur.

               11.6 All the covenants, promises, stipulations and agreements of
Borrower and all the rights and remedies of the Lender in this Agreement
contained shall bind Borrower, and, subject to the restrictions on merger,
consolidation and assignment herein contained, its successors and assigns, and
shall inure to the benefit of Lender, its successors and assigns, whether so
expressed or not. Borrower may not assign its rights herein and no Person shall
be deemed a third party beneficiary of this Agreement.

               11.7 If any one or more of the provisions contained in this
Agreement shall be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.

               11.8 Time is of the essence in the Performance of the
Obligations.

               11.9 All headings are inserted for convenience only and shall not
affect any construction or interpretation of this Agreement. The provisions of
this Agreement shall apply to the parties according to the context hereof and
without regard to the number or gender of words and expressions used herein.
Unless otherwise indicated, all references herein to clauses and other
subdivisions refer to the corresponding paragraphs, clauses and other
subdivisions of this Agreement; the words "hereof", "hereto", "hereunder" and
words of similar import refer to this Agreement as a whole and not to any
particular paragraph, clause or other subdivision hereof; and reference to a
numbered or lettered subdivision of an Article, 


                                      -76-

<PAGE>   77

or paragraph shall include relevant matter within the Article or paragraph which
is applicable to but not within such numbered or lettered subdivision.

               11.10 THIS AGREEMENT HAS BEEN EXECUTED AND DELIVERED AND SHALL BE
PERFORMED IN THE STATE OF ARIZONA. THE PROVISIONS OF THIS AGREEMENT AND ALL
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ARIZONA AND TO
THE EXTENT THEY PREEMPT SUCH LAWS, THE LAWS OF THE UNITED STATES. BORROWER (A)
HEREBY IRREVOCABLY SUBMITS ITSELF TO THE PROCESS, JURISDICTION AND VENUE OF THE
COURTS OF THE STATE OF ARIZONA, MARICOPA COUNTY, AND TO THE PROCESS,
JURISDICTION, AND VENUE OF THE UNITED STATES DISTRICT COURT FOR ARIZONA, FOR THE
PURPOSES OF SUIT, ACTION OR OTHER PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE SUBJECT MATTER HEREOF BROUGHT BY LENDER AND (B) WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, HEREBY WAIVES AND AGREES NOT TO ASSERT
BY WAY OF MOTION, DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING
ANY CLAIM THAT BORROWER IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF THE
ABOVE-NAMED COURTS, THAT SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM OR THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER.

               11.11 It is the intent of the parties hereto to comply with the
Applicable Usury Law. Accordingly, notwithstanding any provisions to the
contrary in this Agreement or in any of the other Documents in no event shall
this Agreement or the Documents require the payment or permit the collection of
interest in excess of the maximum contract rate permitted by the Applicable
Usury Law. If (a) any such excess of interest otherwise would be contracted for,
charged or received from Borrower or otherwise in connection with the
Obligations or (b) the maturity of the Obligations is accelerated in whole or in
part, or (c) all or part of the principal or interest of the Obligations shall
be prepaid, so that under any of such circumstances the amount of interest
contracted for, charged or received in connection with the Obligations would
exceed the maximum contract rate permitted by the Applicable Usury Law then in
any such event (1) the provisions of this paragraph shall govern and control,
(2) neither Borrower nor any other Person now or hereafter liable for the
payment hereof will be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum contract rate permitted by the
Applicable Usury Law, (3) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal amount of the
Obligations of Borrower or refunded to Borrower, at Lender's option, and (4) the
effective rate of interest will be automatically reduced to the maximum contract
rate permitted by the Applicable Usury Law. Without limiting the generality of
the foregoing, to the extent permitted by the Applicable Usury Law: (x) all
calculations of the rate of interest which are made for the purpose of
determining whether such rate would 


                                      -77-

<PAGE>   78

exceed the maximum contract rate permitted by the Applicable Usury Law shall be
made by amortizing, prorating, allocating and spreading during the period of the
full stated term of the Obligations, all interest at any time contracted for,
charged or received from Borrower or otherwise in connection with the
Obligations; and (y) in the event that the effective rate on the Obligations
should at any time exceed the maximum contract rate permitted by the Applicable
Usury Law, such excess interest that would otherwise have been collected had
there been no ceiling imposed by the Applicable Usury Law, shall be paid to
Lender from time to time, if and when the effective interest rate on the
Obligations otherwise falls below the maximum contract rate permitted by the
Applicable Usury Law, to the extent that interest paid to the date of
calculation does not exceed the maximum contract rate permitted by the
Applicable Usury Law, until the entire amount of interest which would have
otherwise been collected had there been no ceiling imposed by the Applicable
Usury Law has been paid in full. Should the maximum contract rate permitted by
the Applicable Usury Law be increased at any time hereafter because of a change
in the law, then to the extent not prohibited by the Applicable Usury Law, such
increases shall apply to all Obligations regardless of when incurred; but, again
to the extent not prohibited by the Applicable Usury Law, should the maximum
contract rate permitted by the Applicable Usury Law be decreased because of a
change in the law, such decreases shall not apply to the Obligations regardless
if resulting from an advance of the Loan made after the effective date of such
decrease.

               11.12 This Agreement is an amendment, restatement and
consolidation in full of the Existing PEC Loan Agreement and the Existing VSR
Loan Agreement and all matters formerly governed by the Existing PEC Loan
Agreement and the Existing VSR Loan Agreement shall now be governed by this
Agreement. This Agreement shall not, however, constitute a waiver of any
existing default or breach of a covenant and shall have no retroactive effect
whatsoever; provided, however, that any and all written waivers given heretofore
are hereby extended to the date hereof. Within thirty (30) days after the
Closing Date, Lender shall return to Borrower the original Amended and Restated
Promissory Note executed and delivered by Borrower to Lender pursuant to the
terms of the Existing PEC Loan Agreement and the original Amended and Restated
Promissory Note executed by VSR and delivered to Lender pursuant to the terms of
the Existing VSR Loan Agreement. In addition, upon Lender's receipt of written
confirmation from Title Company, satisfactory to Lender in its sole discretion,
that all Purchaser Mortgages for each Lot in the Project encumbered by the
Huerfano Deed of Trust have been reconveyed, Lender shall execute and deliver to
Borrower for recording in the Official Records of Huerfano County, Colorado, a
Full Release and Reconveyance of the Huerfano County Deed of Trust.

                                   ARTICLE XII

                              CONDITIONS PRECEDENT

               Lender's obligations under this Agreement and its further
obligations to make any Advances described in this Agreement are subject to the
following conditions precedent, 


                                      -78-

<PAGE>   79

all of which must be satisfied on or prior to the Closing Date (unless otherwise
hereinafter specifically provided):

               1. Borrower shall have delivered to Lender the following executed
        documents, all in form satisfactory to Lender:

                    (a) This Agreement;

                    (b) The Receivables Note;

                    (c) From the Guarantor of the Loan, a "Consent of Guarantor"
               in a form acceptable to Lender;

                    (d) From each of the Trustees under any Trust, an
               Acknowledgment and Consent in the form attached hereto, which
               shall be executed and delivered to Lender within thirty (30) days
               after the Closing Date;

                    (e) An opinion from Borrower's counsel and an opinion from
               Guarantor's counsel, each of which counsel shall be acceptable to
               Lender, with respect to such matters as Lender shall require;

                    (f) A corporate resolution of Borrower in form and substance
               acceptable to Lender;

                    (g) A corporate resolution of Guarantor in form and
               substance acceptable to Lender;

                    (h) A First Amendment to Promissory Note with respect to the
               Ida Building One Note;

                    (i) A First Amendment to Promissory Note with respect to the
               Ida Building Two Note;

                    (j) A First Amendment to Promissory Note with respect to the
               Ida Building Addition Note;

                    (k) A First Amendment to Promissory Note with respect to the
               Winnick Building Addition Note;

                    (l) A Second Amendment to Promissory Note with respect to
               the Towers Note;


                                      -79-

<PAGE>   80

                    (m) A Fifth Modification of Deed of Trust, Assignment of
               Rents and Proceeds and Security Agreement with respect to the
               Headquarters Deed of Trust;

                    (n) A Fourth Modification of Deed of Trust, Assignment of
               Rents and Proceeds and Security Agreement with respect to the Ida
               Building One Deed of Trust;

                    (o) A Third Modification of Deed of Trust, Assignment of
               Rents and Proceeds and Security Agreement with respect to the Ida
               Building Two Deed of Trust;

                    (p) A Third Modification of Mortgage, Assignment of Rents
               and Proceeds and Security Agreement with respect to the Aloha Bay
               Mortgage;

                    (q) A Second Modification of Deed of Trust, Assignment of
               Rents and Proceeds and Security Agreement with respect to the
               Winnick Building Addition Deed of Trust;

                    (r) A Second Modification of Deed of Trust, Assignment of
               Rents and Proceeds and Security Agreement with respect to the Ida
               Building Addition Deed of Trust;

                    (s) A Second Modification of Deed of Trust, Assignment of
               Rents and Proceeds and Security Agreement with respect to the
               FCFC Deed of Trust;

                    (t) Such other documents or instruments required by Lender
               to fully perfect the liens and Security Interests of Lender
               described or contemplated herein;

                    (u) Such other items as Lender may require.

                 2. Borrower shall have obtained and delivered to Lender, at
        Borrower's expense, appropriate date-down endorsements to the existing
        Title Policies issued in favor of Lender with respect to each of the
        Headquarters Deed of Trust, the FCFC Deed of Trust, the Ida Building One
        Deed of Trust, the Ida Building Two Deed of Trust, the Ida Building
        Addition Deed of Trust, the Winnick Building Addition Deed of Trust and
        the Aloha Bay Mortgage, which endorsements shall insure that such
        Mortgages continue to be first and prior liens on the property which are
        the subject matters thereof subject only to such additional exceptions
        as may be approved by Lender and


                                      -80-

<PAGE>   81

        notwithstanding the effect of the recordation of the modifications
        described in PARAGRAPHS 1(m), 1(n), 1(o), 1(p), 1(q), 1(r) OR 1(s)
        above.

                 3. Lender shall have received evidence that, as of the Closing
        Date, there has been no material adverse change in the financial
        condition of Borrower or Guarantor from the financial statements and
        other documents most recently submitted to Lender.

                 4. Lender shall have received, reviewed and approved current
        lien, tax lien, litigation and judgment searches with respect to the
        each of Borrower and Guarantor. In connection therewith, Borrower shall
        have delivered to Lender, and Lender shall have reviewed and approved to
        its satisfaction, an updated report and analysis with respect to all
        litigation matters involving Borrower and Guarantor.

                 5. Lender shall have received, reviewed and approved such
        documents or other evidence as Lender shall require to establish that
        any and all indebtedness owed by Borrower to Heller Financial and
        Textron Financial is currently paid and Borrower is in good standing and
        in compliance with all of its obligations to Heller Financial and
        Textron Financial.

                 6. Lender shall have received, reviewed and approved to its
        satisfaction management letters written by Deloitte & Touche to
        Guarantor and Borrower with respect to their 1996 fiscal year, together
        with any responses to such management letters by Borrower or Guarantor.

                 7. Lender shall have received, reviewed and approved to its
        satisfaction financial statements for Guarantor and Borrower for the
        fiscal quarter ending November 30, 1996. In addition, as a condition
        subsequent, Borrower shall have delivered to Lender not later than June
        1, 1997, and Lender shall have reviewed and approved to its reasonable
        satisfaction, financial statements for Guarantor and Borrower for the
        fiscal quarter ending February 28, 1997. The failure of Borrower to
        deliver such financial statements as of June 1, 1997 shall be deemed to
        be an Event of Default under this Agreement.

                 8. Borrower shall have paid all closing costs, title company
        charges, recording fees and taxes, appraisal fees and expenses, survey
        fees, travel expenses, architect/engineer inspection fees and expenses,
        fees and expenses of Lender's counsel, and all other costs and expenses
        incurred by Lender in connection with the preparation and closing of
        this Agreement.

                 9. Lender's obligation to make the Second Winnick Building
        Addition Advances under the Mortgage Loan Facility is subject to the
        satisfaction by Borrower of the additional conditions precedent and
        conditions subsequent set forth in EXHIBIT "12.10" attached hereto.


                                      -81-

<PAGE>   82

               IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by Persons duly authorized on the day and year first above
written.

"BORROWER"                                 "LENDER"

PREFERRED EQUITIES CORPORATION,            FINOVA CAPITAL CORPORATION, 
a Nevada corporation                       a Delaware corporation



By: /s/ DENAY R. MIDDLETON                 By: /s/ KEVIN WALSH
   ---------------------------------          --------------------------------
Name: Denay R. Middleton                   Name: Kevin Walsh
     -------------------------------            ------------------------------
Title: Vice President                      Title: Vice President
      ------------------------------             -----------------------------

WITNESSED:                                 ATTEST:

/s/ Elaine H. Holley                       /s/ [SIG]
------------------------------------       -----------------------------------
                                           Asst. Secretary
/s/ [SIG]
------------------------------------       WITNESSED:

                                           /s/ SHARON WILLIAMS
                                           -----------------------------------

                                           /s/ PATRICIA H. STEINER
                                           -----------------------------------



Send notices to:                           Send notices to:

Preferred Equities Corporation             FINOVA Capital Corporation
4310 Paradise Road                         7272 East Indian School Road
Las Vegas, Nevada  89109                   Suite 410
Attn:  President                           Scottsdale, Arizona  85251
                                           Attn:  Vice President - Group Counsel


                                      -82-

<PAGE>   83


With a copy to:                            With a copy to:

Mr. Jerome J. Cohen                        FINOVA Capital Corporation
1125 N.E. 125th Street                     7272 East Indian School Road
Suite 206                                  Suite 410
North Miami, Florida  33161                Scottsdale, Arizona  85251
                                           Attn:   Vice President - Operations
                                                   Management







                                      -83-

<PAGE>   84


STATE OF ARIZONA             )
                             ) ss.
COUNTY OF MARICOPA           )

               BEFORE ME, the undersigned authority, a Notary Public in and for
the County and State aforesaid, on this day personally appeared DONALD R.
MIDDLETON, known to me to be the VICE PRESIDENT of PREFERRED EQUITIES
CORPORATION, a Nevada coarporation, who acknowledged to me that the same was the
free act and deed of such corporation and that s/he being authorized by proper
authority to do so, executed the same on behalf of such corporation for the
purposes and consideration therein expressed, and in the capacity therein
stated.

               GIVEN UNDER MY HAND AND SEAL OF OFFICE this 16th day of May,
1997.

                                         /s/ Sandra M. Ulright
                                         --------------------------------------
NOTARY SEAL:                             Notary Public




STATE OF ARIZONA             )
                             ) ss.
COUNTY OF MARICOPA           )

               BEFORE ME, the undersigned authority, a Notary Public in and for
the County and State aforesaid, on this day personally appeared KEVIN WALSH,
known to me to be the VICE PRESIDENT of FINOVA CAPITAL CORPORATION, a Delaware
orporation, who acknowledged to me that the same was the free act and deed of
such corporation and that s/he being authorized by proper authority to do so,
executed the same on behalf of such corporation for the purposes and
consideration therein expressed, and in the capacity therein stated.

               GIVEN UNDER MY HAND AND SEAL OF OFFICE  this 21st day of May,
1996.

                                         /s/ [SIG]
                                         --------------------------------------
NOTARY SEAL:                             Notary Public


                                      -84-
<PAGE>   85


                                LIST OF EXHIBITS




Exhibit "I-A"     -       Legal description of Aloha Bay

Exhibit "I-B"     -       Copy of Custodial Agreement

Exhibit "I-C"     -       Conditions of Eligible Receivables

Exhibit "I-D"     -       Legal description of FCFC Property, 1500 East 
                          Tropicana, Las Vegas, Nevada

Exhibit "I-E"     -       Legal description of Grand Flamingo Fountains, Las 
                          Vegas, Nevada

Exhibit "I-F"     -       Legal description of Headquarters Building, 4310 
                          Paradise Road, Las Vegas, Nevada

Exhibit "I-G"     -       Legal description of Ida Building Addition, 190 and 
                          196 Ida Street, Las Vegas, Nevada

Exhibit "I-H"     -       Legal description of Ida Building One, 170 and 178 
                          Ida Street, Las Vegas, Nevada

Exhibit "I-I"     -       Legal description of Ida Building Two, 165, 171 and 
                          177 Ida Street, Las Vegas, Nevada

Exhibit "I-J"     -       Legal description of portions of the Project located 
                          in Huerfano County, Colorado

Exhibit "I-K"     -       Legal description of Project (Reno), also known as 
                          Reno Spa Resort Club

Exhibit "I-L"     -       Legal description of Project (Terraces - Phase I)

Exhibit "I-M"     -       Legal description of Project (Terraces - Phase II)

Exhibit "I-N"     -       Legal description of Project (Towers)

Exhibit "I-O"     -       Legal description of Project (Villas)



                                      -85-

<PAGE>   86
Exhibit "I-P"     -       Legal description of Second Winnick Building Addition,
                          184, 190 and 196 Winnick Avenue, Las Vegas, Nevada

Exhibit "I-Q"     -       Legal description of South Park Ranches, Park County, 
                          Colorado

Exhibit "I-R"     -       Legal description of Grand Flamingo Suites - Phase I, 
                          Las Vegas, Nevada

Exhibit "I-S"     -       Legal description of Grand Flamingo Suites - Phase II,
                          Las Vegas, Nevada

Exhibit "I-T"     -       Legal description of Grand Flamingo Winnick, Las 
                          Vegas, Nevada

Exhibit "I-U"     -       Legal description of Winnick Building Addition, also 
                          known as Courtyard, Las Vegas, Nevada

Exhibit 2.3.6     -       Form of Project Note

Exhibit 3.5       -       Request for Advance and Certification by Borrower

Exhibit 5.2.1     -       List of Requirements for Receivables Advances

Exhibit 5.2.2     -       List of Requirements for Advances Under Mortgage Loan 
                          Facility

Exhibit 8.3(a)    -       Litigation Schedule

Exhibit 8.4(a)    -       List of States in Which Lots and Units Are Sold by 
                          Borrower

Exhibit 8.23      -       Certification of Financial Covenants

Exhibit 8.31      -       List of Current Litigation Matters

Exhibit 12.10     -       List of Additional Conditions Precedent and Subsequent
                          With Respect to Funding of Second Winnick Building 
                          Addition


                                      -86-